GBPUSD trades around 1.2710 down from a two week high.
GBPUSD is on a negative trend after falling from a two-week high of 1.2774 on Wednesday. During Thursday’s Asian session, the GBPUSD pair is trading down near 1.2710. The Pound Sterling (GBP) enjoyed initial support following good Purchasing Managers Index (PMI) data from the United Kingdom. However, this increasing momentum could not be maintained until the release of Positive PMI statistics from the United States (US).
The good UK PMI statistics may persuade the Bank of England to lower interest rates at its February meeting.
The preliminary S&P Global/CIPS Services Purchasing Managers’ Index (PMI) for January in the United Kingdom rose to 53.8 from 53.4. The Manufacturing PMI also improved, rising to 47.3 from 46.2. Simultaneously, the Composite PMI, which includes both the services and manufacturing sectors, rose to 52.5 from 52.1.
The good Purchasing Managers Index (PMI) results indicate that the Bank of England (BoE) may chose not to implement monetary policy loosening measures at its next February meeting.
The BoE is expected to begin a rate cutting cycle at the August meeting.
However, investors appear to anticipate that the BoE will begin a rate-cutting cycle at its August meeting. Market Expected rate reduction total 175 basis points (bps) during the cycle, with the policy rate reaching 4.50% in December 2024.
The good S&P Global Purchasing Managers Index (PMI) data from the United States (US) on Wednesday may lessen the likelihood of the Federal Reserve (Fed) cutting interest rates in March, leading to a drop in the GBPUSD pair. Furthermore, market sentiment as measured by the CME’s FedWatch tool shows that bets on a Fed rate cut in arch have fallen to less than 40%, a significant decline from above 80% just a month ago. Investors will most likely be watching the US Gross Domestic Product Annualized (Q4) data, which is due to be released on Thursday.
The US S&P Global Manufacturing Purchasing Managers’ Index (PMI) rose to an 11-month high. of 50.3 in January, beating the prediction of a constant 47.9. The US Services PMI increased to 52.9, exceeding the projected reading of 51 and the prior number of 51.4. Overall, the Composite PMI for the United States rose to 52.3 from 50.9. This comprehensive index, covering both manufacturing and services, points for an expansion of economic activity across sectors.
