GBP/USD consolidates around mid-1.2700s, downside seems cushioned amid softer USD
|- GBP/USD draws support from a softer USD and bets for a delayed BoE rate cut.
- The UK political uncertainty keeps a lid on any meaningful upside for the GBP.
- Traders now look forward to the release of the US ISM PMI for a fresh impetus.
The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow band, around mid-1.2700s during the Asian session. The downside, meanwhile, remains cushioned in the wake of a modest US Dollar (USD) weakness, weighed down by signs of easing inflationary pressures in the United States (US).
The US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditure Price Index (PCE) held steady at 2.7% on a yearly basis in April. Adding to this, the Core PCE Price Index, which excludes volatile food and energy prices, matched consensus estimates and rose 2.8% on a yearly basis. The data should allow the Federal Reserve (Fed) to cut interest rates later this year. Apart from this, a generally positive risk tone seems to undermine the safe-haven USD, which, in turn, is seen acting as a tailwind for the GBP/USD pair.
The British Pound (GBP), on the other hand, draws support from expectations that more persistent price pressures in the United Kingdom (UK) might force the Bank of England (BoE) to keep interest rates at their current level for a little bit longer. That said, the uncertainty ahead of the UK general election on July 4 is holding back the GBP bulls from placing aggressive bets and capping the upside for the GBP/USD pair. Traders now look to the release of the Manufacturing PMIs from the UK and the US for some impetus ahead of the US ISM Manufacturing PMI.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.