The British pound rose in European trading on Tuesday against a basket of global currencies, resuming its recovery from a two-month low against the US dollar, supported by a pause in the dollars rally ahead of key remarks from Federal Reserve Chair Jerome Powell.

Expectations are leaning toward a 25-basis-point rate cut by the Bank of England at its November meeting. To reassess these odds, investors are awaiting the release of key UK labor market data later today.

Price Overview

GBP/USD: The pound rose by 0.15% to 1.3352 from the opening level of 1.3333, after touching an intraday low of 1.3326.

On Monday, the pound lost 0.2% against the dollar, following a 0.4% rise on Friday as part of a rebound from a two-month low of 1.3262.

US Dollar

The US dollar index fell by more than 0.15% on Tuesday, pulling back again from its two-month high, reflecting a pause in the greenbacks advance against major and minor currencies.

This decline came as investors weighed the latest trade tensions between the United States and China, which, if they intensify, could reignite a trade war between the worlds two largest economies.

Federal Reserve Chair Jerome Powell is scheduled to participate in a moderated discussion on the economic outlook and monetary policy at the annual meeting of the National Association for Business Economics in Philadelphia, where audience questions are expected.

UK Interest Rates

Following the Bank of Englands most recent meeting, traders increased bets on further monetary easing, expecting at least one additional 25-basis-point cut this year.

Futures markets currently price a roughly 60% probability of a 25-basis-point cut at the November policy meeting.

UK Labor Market

To reassess these expectations, investors are awaiting the release of key UK labor market indicators later today, including September jobless claims, the unemployment rate, and average earnings for August.

Pound Outlook

Here at Economies.com, we expect that if the upcoming UK labor market data turn out softer than market expectations, the likelihood of a Bank of England rate cut in November will increase likely placing downward pressure on the pound.