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The British pound began the week on a firmer footing, supported by growing expectations that major central banks may soon shift toward easing monetary policy. The GBP/USD pair advanced modestly as investors increased their bets that the US Federal Reserve could cut interest rates as early as next week. At the same time, speculation about upcoming leadership changes at the Fed added another layer of interest to the market mood.
The latest US manufacturing data strengthened these expectations. Figures showed the sector contracting for the ninth consecutive month, with a softer employment component underscoring weakening momentum in the broader economy. As a result, the probability of a Fed rate cut surged, pushing investors toward the pound and lifting the currency pair.
Sterling itself has enjoyed a period of strength, recently notching its largest weekly gain since early August. Historical patterns also suggest that December often favors the British currency. However, the outlook is far from one-sided. Markets are also pricing in a high likelihood that the Bank of England could lower rates this month. If the UK eases policy while the US holds steady, any recent gains in the pound may come under pressure.
Traders now turn their attention to a packed data calendar on both sides of the Atlantic. Key US releases—including employment figures, service-sector activity, jobless claims, and the Fed’s preferred inflation gauge—could set the tone for the central bank’s next move. In the UK, upcoming business activity surveys will offer fresh insight into economic conditions and may influence expectations for the Bank of England’s December decision.
Overall, the week ahead promises heightened volatility, with currency markets responding quickly to economic signals as the year’s final policy meetings draw near.
