GBP/USD Rises as Waller's Comments Reduce Rate Hike Bets
The British Pound rose against the US Dollar on Thursday as Federal Reserve Governor Christopher Waller expressed a more neutral stance on monetary policy, reducing bets for a rate hike. Waller stated that if inflation data cools down, he would consider allowing a resumption of the disinflation process and keeping the Fed funds rate unchanged. However, he also warned that if inflation comes in hot, he would not hesitate to consider a rate increase.
Waller's comments led to a repricing in money markets, with odds of a 25-basis-point rate hike shrinking from over 60% to 54%. Meanwhile, the US ISM Services PMI for August came in at 55.4, exceeding forecasts of 54.3 and July's 54.1.
The data showed that companies are complaining about higher prices, while the jobs market seems to have stabilized but remains in contractionary territory. The number of Americans filing for unemployment benefits rose from 204K to 206K, indicating a 'low-firing, low-hiring environment'. Earlier, announced plans to hire by companies rose 37% in the first eight months of 2026 compared to the same period last year.
In the UK, Bank of England Chief Economist Huw Pill was hawkish, saying that he believes raising interest rates 'may serve to head off some of the potential insidious catch-up dynamics'. His comments supported Sterling's resilience despite a lack of domestic data. With traders now focusing on the release of US August Non-Farm Payroll figures on Friday, the GBP/USD price is holding above key support levels.