- GBP/USD is expected to smash 1.1200 as the DXY displays a subdued performance.
- Weaker consensus for US ISM Manufacturing PMI would keep the DXY on the back foot.
- The UK economy reported upbeat GDP data despite various headwinds.
The GBP/USD pair is struggling to smash the immediate hurdle of 1.1200 in the early Tokyo session. The cable has displayed a modest upside move after the termination of the corrective move to near 1.1022. The major is expected to continue its lackluster performance in the 1.1100-1.1170 range and later display a bullish imbalanced move.
On Friday, the pound bulls didn’t respond in expectation to the upbeat UK Gross Domestic Product (GDP) data. The UK National Statistics reported that the economic activities in the UK economy have grown by 0.2% against the expectation of a decline of 0.1% on a quarterly basis. Also, the annual data has improved dramatically to 4.4% vs. the projections and the prior release of 2.9%.
There is no denying the fact that the deepening energy crisis has hurt the sentiment of UK households. Apart from that, galloping price pressures, weak economic fundamentals, and the inability to generate decent employment opportunities have created chaos for the Bank of England (BOE) policymakers. Despite the several headwinds the pound region has displayed an uptick in the GDP data.
Meanwhile, the ongoing bond-buying program by the BOE to bring stability to the financial markets is offsetting the impact of hawkish monetary policy to a certain point.
The US dollar index (DXY) is expected to drop below the immediate support of 112.00 on lower consensus for the US ISM Manufacturing PMI data.
According to the estimates, the US ISM Manufacturing data will release at 52.3 vs. the former release of 52.8. Accelerating interest rates by the Federal Reserve (Fed) to bring price stability to the economy has forced corporations to withdraw their expansion and investment plans. The US ISM New Orders Index PMI data will trim sharply to 49.6 vs. the prior release of 51.3.
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