- GBP/USD loses ground near 1.2695 amid renewed USD demand.
- The US Services PMI fell to 52.6 in February, worse than expected.
- Markets expect the Bank of England (BoE) to start cutting interest rates in August.
- Investors await the UK S&P Global Construction PMI and Fed Jerome Powell’s testimony on Wednesday.
The GBP/USD pair holds below the 1.2700 mark during the early Asian session on Wednesday. The downtick of the pair is backed by the renewed US Dollar (USD). Later on Wednesday, the UK S&P Global Construction PMI and the Federal Reserve’s (Fed) Jerome Powell’s testimony will be in the spotlight. GBP/USD currently trades near 1.2695, losing 0.08% on the day.
Atlanta Fed President Raphael Bostic said on Monday that he expects the first interest rate cut from the Fed, scheduled for the third quarter, will be followed by a pause in the subsequent meeting to evaluate the impact of the policy adjustment on the economy. According to the CME FedWatch Tool, financial markets have priced in 3.0% odds of a 25 basis point (bps) rate cut at the FOMC meeting in March.
The Institute for Supply Management (ISM) survey on Tuesday reported that US Services PMI slipped to 52.6 in February from 53.4 in January. The figures came in weaker than the expectation of 53.0.
On the other hand, the UK Chancellor Jeremy Hunt spoke at the Spring budget and cut national insurance by 2p in his budget on Wednesday. Apart from this, investors anticipate the Bank of England (BoE) to start cutting interest rates in August when inflation is expected to return to the 2% target before increasing again.
Later on Wednesday, Fed Chair Jerome Powell is set to speak before Congress for his semiannual testimony on Wednesday. The US Nonfarm Payrolls (NFP) on Friday will be the highlight for this week, which is forecast to add 200,000 jobs in February. Traders will take cues from the events and find trading opportunities around the GBP/USD pair.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.