The Pound is steady around 1.3230 against the US Dollar on Monday, although it is softer against most other major currencies. GBP/USD is moving sideways as investors wait for a busy week of economic data while the US Dollar continues to drift lower on expectations that the Federal Reserve will cut interest rates next week.

The US Dollar Index dropped to a fresh two-week low near 99.30 during the European session. Market pricing remains firm, with the CME FedWatch tool showing an 87.5% chance of a 25-basis-point rate cut in December. Traders have been leaning toward a dovish outcome as US labour market data continues to soften and as the impact of recent tariffs appears limited in terms of inflation pressure.

The Pound is under pressure more broadly as expectations rise that the Bank of England could deliver a rate cut on December 18. Markets are looking for a 25-basis-point reduction to 3.75%, following recent signs of slowing job growth and cooling inflation in the UK. Lower gilt yields are also weighing on sentiment. Ten-year UK yields have slipped to roughly 4.44%, down from the November peak of 4.62%, after Chancellor Rachel Reeves announced new tax increases in last week’s Autumn Budget. The plan aims to raise £26 billion by 2029–30 to address the fiscal shortfall. Moody’s welcomed the effort but warned that risks remain if implementation falls short.

This week, GBP/USD will be sensitive to several key US releases. On Wednesday, the ADP Employment Change report will give a clearer view of private-sector labour demand, with forecasts pointing to a modest 20,000 new jobs in November compared with 42,000 in October. Later today, traders will watch the US ISM Manufacturing PMI, expected to show a further contraction at 48.6 for November.

Trade Idea:
Sell rallies into 1.3260–1.3280, targeting 1.3150, while keeping stops above 1.3310 ahead of this week’s US labour data.