COMMENT-Sterling anchored by its 10-DMA awaiting inflation, rates clues

GBP/USD remained anchored by its flattening 10-DMA at 1.2731, down 0.07% in early NorAm trading, shrugging off falling long-term U.S. Treasury yields and below forecast UK manufacturing PMI data as traders cast their gaze on Friday's U.S. payrolls data.

ISM manufacturing and service data as well as JOLTS may pose headline risk this week, along with U.S. non-farm payrolls.

Under current interest rate conditions, GBP/USD is likely to remain static, near recent trend highs, as rate futures indicate the BoE and Fed are likely to travel similar rate paths into year-end.

However, given the BoE's slightly more dovish rate outlook, and a steady stream of more hawkish Fed rhetoric risks are tipped to more USD strength given more persistent U.S. inflation.

Minneapolis Fed President Neal Kashkari, who was reported by the FT as saying that interest rates should stay on hold for an extended time.

With a variety of U.S. inflation metrics, including the recent core PCE price index, showing little progress toward the Fed's 2% inflation target, GBP/USD risks remain to the downside unless UK inflation reduction tempers.

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