The British pound (GBP) declined by 0.26% to near 1.3200 against the US Dollar (USD) during early European trading on Monday, as the GBP/USD pair faced selling pressure due to the US Dollar's outperformance. This strength in the USD was attributed to increased safe-haven demand following heightened French fiscal concerns, which pushed the US Dollar Index (DXY) up by 0.42% to a fresh yearly high of 102.53 [1].
According to the latest data, the US Dollar was the strongest against the Euro, gaining 0.61%, and rose 0.27% against the British pound. The heat map of major currencies showed the USD outperforming most peers, reflecting broad-based demand for the Greenback [1].
Market expectations for the Federal Reserve's October policy meeting shifted notably after the release of the US Nonfarm Payrolls (NFP) data on Friday, which indicated moderate job growth. The CME FedWatch tool now shows an 82.3% probability that the Fed will keep interest rates steady this month, a significant change from the 35.8% probability seen last week [1].
Later in the day, investors are awaiting the US ISM Services Purchasing Managers Index (PMI) data for September, scheduled for release at 14:00 GMT. The PMI is expected to rise to 55.7 from 55.4 in August, which could further influence market sentiment [1].
From a technical perspective, GBP/USD trades at 1.3207, maintaining a bearish near-term bias as the spot price remains below the 20-day exponential moving average (EMA) at 1.3324. This positioning suggests that sellers are in control, with buyers struggling to regain the broken trend reference [1].
CONCLUSION
The GBP/USD pair is under pressure as the US Dollar strengthens on safe-haven flows and shifting Fed expectations. With the DXY at a yearly high and technical indicators favoring sellers, the market remains cautious ahead of key US economic data releases.