GBP/USD looks to approach 1.2750, focus on US PCE
|- GBP/USD trades higher around 1.2720 due to downbeat US economic data.
- Investors turn cautious as they anticipate an interest rate hike by the BoE.
- The retreating US Treasury yields continue to undermine the US Dollar (USD).
GBP/USD treads waters to continue the winning streak for the fourth consecutive day, trading higher around 1.2720 during the Asian session on Thursday. The pair is experiencing upward pressure due to the disappointing United States (US) macroeconomic data released on Wednesday.
After the recent release of the soft Job Openings report from the previous Tuesday, the August ADP National Employment Report showed weaker hiring than the projected 195K, contributing 177K jobs to the economy. This contrasts with the 371K jobs added in July. Preliminary Gross Domestic Product (GDP) reported at 2.1%, below the previous reading of 2.4%. The index was expected to remain consistent.
Investors anticipate a 25 basis points (bps) interest rate hike at the upcoming monetary policy meeting in September by the Bank of England (BoE), which could provide support to the GBP/USD pair. However, market participants are also adopting a cautious stance due to the potential impact of further monetary policy tightening on the United Kingdom’s (UK) economy.
US Dollar Index (DXY) struggles to snap a three-day losing streak, trading around 103.10 at the time of writing. The DXY reached its lowest in two weeks on Wednesday. The Greenback continues to face downward pressure due to downbeat US economic data and declining US Treasury yields. The yield on a 10-year US bond hit a bottom at 4.08% during the previous session, currently trading at 4.11%.
Investors will likely watch the upcoming data from the US scheduled to be released on Thursday, notably the US Federal Reserve’s preferred gauge for inflation, the Personal Consumption Expenditures (PCE), and further Initial Jobless Claims (Aug 25). These datasets are expected to have a substantial influence on shaping strategies before engaging in fresh trading positions on the USD/CHF pair.
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