GBP/USD is trading cautiously below 1.3100 with FOMC minutes on the horizon

• GBP/USD remains below 1.3100 as traders prepare for the FOMC minutes.
• Upbeat US labor market data dampened risks of an economic slowdown.
• Investors expect the BoE to cut interest rates again by 25 bps.

GBP/USD is trading cautiously below the crucial 1.3100 resistance in the London session on Wednesday. The phone remains under pressure as the US dollar (USD) extends its rally and traders shrugged off another 50 basis point (bps) Federal Reserve (Fed) interest rate cut in November.

Market sentiment remains risk-off amid escalating tensions between Israel and Iran. S&P 500 futures posted some losses in European trading hours. The US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, is struggling to rise further above 102.70.

Market participants do not expect the Fed to cut interest rates again at a faster-than-usual pace of 50 bps, as risks of an economic slowdown in the United States (US) eased after the release of upbeat labor market data for September, which showed robust job growth and stronger-than-expected wage growth momentum.

In Wednesday’s session, investors will focus on the Federal Open Market Committee’s (FOMC) minutes for the September meeting, which will be released at 18:00 GMT. At the policy meeting, Fed officials voted unanimously to cut interest rates by 50 basis points (bps) to 4.75%-5.00%, with the exception of Fed Governor Michelle Bowman, who supported an ordinary rate cut interest rate of 25 bps.

In the United Kingdom (UK) region, the pound sterling (GBP) will be guided by market expectations of the Bank of England’s (BoE) interest rate outlook for the rest of the year. The BoE is expected to cut interest rates again by 25 bps in one of its two remaining meetings this year. On the economic front, investors will focus on monthly Gross Domestic Product (GDP) and factory data for August due out on Friday.