During Tuesday's session, the USD fell against the majority of its rivals due to weaker-than-anticipated employment data, which fueled dovish wagers on the Federal Reserve (Fed). In addition, the GBP traded weakly against the majority of its rivals following the August publication of UK food inflation data.

In July, the US Bureau of Labour Statistics reported that the JOLTs Job Openings data from the United States fell short of expectations. The actual number was 8.82 million, which was less than the previous reading's prediction of 9.465 million. In response, US bond rates fell by more than 3 percentage points to their lowest level in nearly three weeks, as the 2-year yield declined. This decline could be explained by the fact that markets are now pricing in rate cuts by the Fed in June, whereas in prior sessions they had placed wagers on July.

In contrast, the British Retail Consortium reported a decline in store price inflation, which fell from 7.9% in July to 6.9% in August. The World Interest Rates Probabilities (WIRP) tool indicates that markets are factoring in a 75% likelihood of a 25bps increase at the upcoming September 21, 2023 meeting of the Bank of England (BoE). There is an 80% probability of a similar increase in November, followed by a 90% chance of a 25bps increase in December, bringing the target rate to 6%. In this regard, tightening expectations may limit GBP losses.

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