GBP/USD hovers around 1.2530 after paring gains, focus on US ISM Manufacturing PMI
|- GBP/USD remains in the positive territory after trimming daily gains on Monday.
- US ISM Manufacturing PMI is expected to improve to 48.4 in March, from 47.8 prior.
- GBP could face a struggle due to the speculation of the BoE initiating three quarter-point rate cuts in 2024.
GBP/USD trims intraday gains, remaining higher around 1.2530 during the Asian hours on Monday. US Dollar (USD) recovers its daily losses on risk aversion ahead of ISM Manufacturing Purchasing Managers Index (PMI) data from the United States (US) scheduled to be released later in the North American session, capping the advance of the GBP/USD pair.
However, the US Dollar Index (DXY) encountered difficulties following dovish comments from Federal Reserve (Fed) Chairman Jerome Powell on Friday. Powell remarked that recent US inflation data was in line with expectations, supporting the Fed's position on potential interest rate cuts throughout 2024. Fed officials maintain projections of three rate cuts this year. Market participants anticipate the first of these cuts to materialize at the June meeting.
In February, US Core Personal Consumption Expenditures (PCE) increased by 0.3% month-over-month (MoM), aligning with market expectations and slightly lower than January's 0.5%. The annual index rose by 2.8%, meeting expectations and slightly lower than the previous increase of 2.9%. US Headline PCE (MoM) saw a 0.3% increase, slightly below expectations and lower than the previous month's 0.4% rise. Year-over-year PCE increased by 2.5%, meeting expectations.
On the other side, the anticipation of the Bank of England (BoE) initiating three quarter-point rate reductions in 2024 is putting pressure on the Pound Sterling (GBP). This pressure is further compounded by recent weaker economic data, indicating that the UK economy slipped into recession in the latter half of 2023. BoE Governor Andrew Bailey's statement suggesting that interest rate cuts will be considered in future policy meetings has added to this pressure.
With limited high-impact data forthcoming from the United Kingdom (UK), traders are likely to gauge the UK economic landscape by closely monitoring indicators such as Nationwide Housing Prices, S&P Global PMI, and Halifax House Prices data set to be released during the week.
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.