GBP Surges Against USD Despite Rising Rate Hike Odds

The British Pound (GBP) strengthened against the US Dollar (USD) on Monday, despite rising odds of a Federal Reserve rate hike.

The GBP/USD currency pair inched higher to around 1.3520 during Asian hours, as the Greenback struggled due to a Goldman Sachs report highlighting that this week's inflation data will be pivotal in determining the Fed's decision.

The US Bureau of Labor Statistics (BLS) reported Nonfarm Payrolls rose by 162,000 in August, beating market expectations and accelerating from an upwardly revised 21,000 increase in July. However, despite the strong labor market, traders boosted their rate hike expectations for September to nearly 58.3%, up from 50.2% before the jobs report.

The Bank of England (BoE) is also expected to raise interest rates by the end of the year due to concerns over UK fiscal sustainability and sticky inflation. Analysts at Scotiabank noted that recent commentary from BoE officials has become more supportive for the British Pound, with Chief Economist Huw Pill seeking to manage market expectations while leaning toward hikes overall.