GBP/USD aims to paddle beyond 1.2350 after a V-shape recovery, US GDP in focus
|- GBP/USD is looking to surpass 1.2350 after a recovery amid a risk-on market mood.
- Weaker US yields have weighed down the USD Index as the odds of a slowdown in the Fed’s policy tightening are solid.
- This week, the release of the US GDP data will be of utmost importance.
The GBP/USD pair is looking to extend its recovery above the immediate resistance of 1.2340 in the early Tokyo session. The Cable delivered a V-shape recovery on Tuesday after S&P reported better-than-projected preliminary United States PMI data (Jan). The street was expecting an upbeat performance and therefore supporting the US Dollar Index (DXY) earlier. But later on, dumped the USD Index as a ‘Buy on rumor and sell on news’ indicator was triggered.
S&P500 futures remained choppy on Tuesday and settled with a marginal loss. However, the 500-US stock basket futures have recovered their marginal loss now and portraying a recovery in the risk appetite theme. The return generated by the 10-year US government bonds slipped sharply to 3.45% as the odds of a slowdown in the pace of policy monetary policy tightening are extremely solid.
United States Manufacturing PMI landed at 46.8, higher than the expectations of 46.1 and the former release of 46.2. Also, the Services PMI remained upbeat and scaled higher to 46.6 against the consensus of 44.5 and the prior release of 44.7. The release of the better-than-anticipated US PMI has trimmed recession fears for a while.
For further guidance, investors will focus on the release of the preliminary US Gross Domestic Product (GDP), which is scheduled for Thursday. Per the projections, the annualized GDP is seen lower at 2.8% vs. the prior release of 3.2%. An expression of a contraction in overall economic activities might accelerate recession fears again on a broader basis.
On the United Kingdom front, investors are awaiting the release of the Producer Price Index (PPI) (Dec) data. As per the consensus, the core PPI output is seen higher at 13.9% vs. the former release of 13.3%. Shortage of labor and rising wages for addressing the former could be the reason behind rising prices of goods and services at factory gates.
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.