Pound Sterling remains Cautious Despite the Fluctuating market Sentiment.

The pound Sterling (GBP) finds temporary support in Friday’s European session after Finishing lower on Thursday. The GBPUSD pair may suffer further pressure as higher monthly US core Personal Consumption Expenditure Price Index (PCE) data. For January has dashed Prospects for rate cuts by the Federal Reserve (Fed) at its June policy meeting.

Price Pressures in the UK remain persistent due to high wage growth and service Inflation.

The US monthly core Inflation rate increased by 0.4% in January. Compared to a 0.1% increase in December. Which was revised down from 0.2%. Price pressures were predicted to increase. at a faster rate. But the momentum is incompatible with the goal of achieving a 2% inflation target.
Meanwhile, a little uneasy market sentiment puts the Pound Sterling on edge. In the longer run, the Pound Sterling may gain from expectations. That the Bank of England (BoE) will follow the Fed in lowering interest rates.

Investors are waiting for new manufacturing PMI data from the United Kingdom and the United States.

Investors believe that the BoE and Fed will begin decreasing interest rates in August and June, respectively. This will reduce policy divergence between central banks for some time. If the Bank of England maintained its hawkish position for a longer period of time than other central banks. The pound sterling would attract more foreign inflows.
Today’s session featured the UK’s S&P Global/CIPS Manufacturing PMI. And the US ISM Manufacturing PMI for February  Will be in focus. The UK Manufacturing PMI is projected to continue at 47.1. While the US Manufacturing PMI is expected to have increased to 49.5 from 49.1 in January.

Daily Market Movers: Pound Sterling Awaits UK/US Manufacturing PMI Data.

Following a severe sell-off, the pound sterling found interim support near 1.2600. Despite the market’s cautious tone, the downside remains preferred.
The US Dollar Index, which measures the greenback’s value against six major currencies, continues over 104.00.
The market sentiment is slightly uncertain, as the US core PCE Price Index data for January, issued on Thursday, met expectations. The annual core inflation figures revealed that inflation is gradually dropping, but it is inadequate for Federal Reserve policymakers to embrace normalization. of policy attitude at the present time.
The annual core PCE Price Index fell to its lowest level in three years, 2.8%, as expected by market participants. The monthly core inflation data rose 0.4%, as expected. The rate at which monthly price pressures climbed beyond what is required to bring inflation down to the 2% target.
The underlying inflation data has kept chances for rate reduction at the June meeting alive. According to the CME FedWatch tool, there is a 52% possibility that interest rates will be reduced by 25 basis points. The likelihood of a rate cut in June remains unchanged following the release of critical inflation data.
On the United Kingdom front, investors seek new clues about when The Bank of England will begin cutting interest rates.
The latest Reuters poll predicted that the BoE will decrease interest rates in the third quarter of this year. The narrow majority expects it in August.

BoE policymakers feel that rate decreases would be discussed only after they are confident that inflation will fall to the desired level of 2%.

Currently, BoE policymakers feel that rate decreases would be discussed only. After they are confident that inflation will fall to the desired level of 2%.
BoE policymakers are concerned about the rate at which wages and service inflation are rising. The momentum in the aforementioned inflation indicators is stronger than necessary to return inflation to the 2% objective.