GBP/USD strengthens above 1.3100 as September Fed rate cut bets remain in play

• GBP/USD holds positive ground near 1.3135 in Monday's early Asian session.
• Fed rate cut expectations continue to undermine the US Dollar. 
• The BoE is expected to cut one more 25 bps for the remaining year, according to a Reuters poll.

The GBP/USD pair gains ground around 1.3135, snapping the three-day losing streak during the early Asian session on Monday. In the absence of top-tier economic data releases from the UK this week, the USD price dynamic will be the main driver for the GBP/USD. The US Nonfarm Payrolls (NFP) for August will take center stage on Friday. 

The US Federal Reserve (Fed) easing expectations remain weigh on the Greenback. Fed Chair Jerome Powell last week signalled that a rate cut was imminent, citing labor market concerns. According to the CME FedWatch tool, traders are now pricing in a nearly 70% of the 25 basis points (bps) rate cut by the Fed in September, while the odds of a 50 bps reduction stand at 30%. 

The key US employment data on Friday will help determine whether the US Dollar (USD) recovery can continue. The US economy is expected to see 163K job additions in August, while the Unemployment Rate is expected to tick lower to 4.2%. Average Hourly Earnings are projected to rise to 0.3% MoM in July. In case of weaker-than-expected outcomes, this could raise concern about an economic slowdown in the US economy and drag the Greenback lower. 

On the other hand, investors are gaining confidence that the policy-easing cycle by the Bank of England (BoE) will be gradual in the remainder of the year, which might lift the Pound Sterling (GBP). Economists anticipate one more 25 basis points (bps) rate cut from the BoE this year, according to a Reuters poll.