GBPUSD:
The latest public finance data showed that net borrowing by the public sector reached £18 billion, the highest monthly figure in five years. Economists had expected public borrowing to be significantly lower, at £12.8 billion. Analysts believe that this move threatens to exacerbate the debt burden and increase fiscal risks, which could put some pressure on the pound sterling.
On Thursday, the Bank of England voted to keep interest rates at 4.0% amid uncertain growth prospects and a weakening labor market. This decision was made after the UK central bank last cut its key interest rate by 25 basis points (bps) in August. The Bank of England reiterated that “a gradual and cautious further easing of monetary policy constraints remains appropriate.”
As for the US dollar, last week the US Federal Reserve (Fed) approved a widely expected rate cut and signaled that there would be two more cuts before the end of the year.
Traders will be focusing more on the Fed’s statements later on Monday. Comments from Fed officials may provide some clues about the outlook for US interest rates.
Trading recommendation: SELL 1.3430, SL 1.3460, TP 1.3380
Origin: FreshForex
