Important events for today:

03.12 13:15 UTC: USD – ADP Employment Change
03.12 15:00 UTC: USD – ISM Services PMI

The pound is trading steadily above 1.32 due to dollar weakness driven by expectations of upcoming Fed policy easing and signs of cooling US industrial activity. Lower market volatility and stabilization in Treasury yields reduced the dollar’s appeal as a safe haven, supporting European currencies, including GBP.

Domestic factors in the UK are mixed: budget constraints and weak growth limit optimism, but still elevated – though gradually slowing – wage dynamics and cautious Bank of England rhetoric keep rate expectations relatively high compared to the US. As a result, short-term rate differentials and real yields in favor of the pound are no longer narrowing, and capital inflows into UK assets have stabilized.

Key risks include a sudden tightening in US financial conditions from data surprises or the deterioration of the UK’s fiscal outlook. However, under the current balance of factors and a neutral external backdrop, the pair has room for moderate upside, justifying purchases on pullbacks with strict stop-loss control.

Recommendations: BUY 1.3235, SL 1.3205, TP 1.3325