Pound Sterling faces pressure over 1.2580 due to cautious attitude.

In Wednesday’s late London session, the pound sterling (GBP) struggles to extend its rebound above 1.2580. Caution among market investors ahead of the March US Nonfarm Payrolls (NFP) data has negated the positive impact of the UK Manufacturing PMI’s return to growth.

The UK Manufacturing PMI rose in March for the first time in two years.

The UK Manufacturing PMI unexpectedly rose in March after falling for 20 months. Owing to strong domestic demand for consumer products. S&P Global/CIPS indicated. That business optimism increased to its highest level since April 2023, with 58% of manufacturers aim to boost production in the next 12 months. The Bureau of Economic Analysis stated: “Improved sentiment reflected signs of stronger demand, new product launches. A better trading environment, export opportunities and hopes the cost and supply situations would move closer to normal conditions.”This week, the GBPUSD pair will be influenced by US job market statistics. And market expectations for when the Bank of England (BoE) may begin to reduce interest rates.

Investors expect the BoE to begin the rate-cut cycle in June.

Investors’ expectations for rate reduction have been pushed forward to the June policy meeting from August. After UK inflation fell more than predicted in February.

Daily Market movers: Pound Sterling consolidates ahead of US data.

The Pound Sterling is trading just below 1.2600. Against the The US dollar (USD) is expected to rise in anticipation of major events. Investors are focusing on Federal Reserve Chairman Jerome Powell’s speech. Which is scheduled for 16:10 GMT, as well as the United States NFP data, which will be released on Friday.
Fed Powell’s speech could provide more information about when the central bank would begin lowering interest rates.

Currently, investors expect the Fed to begin lowering borrowing costs at the June meeting. The US Dollar Index (DXY) falls from a new four month high of 105.10. During today’s session, investors will focus on the March ISM Services PMI and ADP Employment Change statistics.
On Tuesday, the positive S&P Global/CIPS Manufacturing PMI for March bolstered the Pound Sterling’s rise. The agency stated that the After 20 consecutive months of contraction, manufacturing PMI returned to expansion. The Manufacturing PMI increased to 50.3, beyond the 50.0 mark, exceeding expectations and the previous reading of 49.9.
Aside from the significant recovery in the Manufacturing PMI, British home prices increased by 1.6% in March, the fastest pace since December 2022. Despite the Bank of England’s decision to keep interest rates high, home activity has risen up.
A significant comeback in the manufacturing and real estate industries indicates that the recession in the second half of 2023 was likely brief and that the economy has resumed growth. In such a case, the BoE may achieve a so-called “soft landing”—a situation when an economy brings inflation under control without triggering A recession.
Investors will now focus on the final S&P Global/CIPS Services PMI data for March, which will be released on Thursday. The Services PMI is expected to have remained unchanged from the preliminary estimate of 53.4.