- GBP/USD loses ground as the USD trades with mild gains on Monday.
- The markets were confident the rate-hike cycle was done, although Powell emphasized the Fed's willingness to tighten policy further if necessary.
- UK S&P Global/CIPS Manufacturing PMI climbed to 47.2 in November vs. 46.7 prior, better than expected.
The GBP/USD pair holds below the 1.2700 mark during the Asian session on Monday. However, the downside of the pair seems limited as the speculation that the Federal Reserve (Fed) is done with its tightening cycle exerts pressure on the US Dollar (USD) and creates a tailwind for the GBP/USD pair. The major currently trades around 1.2680, down 0.23% on the day.
The markets turned cautious following dovish comments from Fed Chair Jerome Powell on Friday. Traders prefer to wait on the sidelines ahead of the highly-anticipated employment report on Friday that could influence the outlook for US interest rates. Powell stated that it was clear that US monetary policy was slowing the economy as expected, with the benchmark overnight interest rate well into restrictive territory.
While Powell emphasized the Fed's willingness to tighten policy further if necessary, markets were confident the rate-hike cycle was done. This, in turn, weighs on the Greenback across the board.
On the GBP’s front, Bank of England (BoE) Governor Andrew Bailey said last week that the central bank would do whatever it takes to achieve its 2% inflation objective, but that he has not seen enough progress to be confident. On Friday, UK S&P Global/CIPS Manufacturing PMI climbed to 47.2 in November from 46.7 in October, above the market consensus of 46.6.
In the absence of economic data released from the UK docket this week, the GBP/USD pair remains at the mercy of USD price dynamics. On Tuesday, the US ISM Services PMI will be due, which is expected to grow from 51.8 to 52.0. The highlight this week will be the US Nonfarm Payrolls on Friday. The US economy is estimated to add 180K jobs in November. Traders will take cues from these figures 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 stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
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.