GBP/USD holds above 1.2700 ahead of UK, US PMI data

GBP/USD gains ground near 1.2713 amid the risk-on mood.
The Bank of England (BoE) is expected to hold the policy rate unchanged at 5.25% at its February 1 meeting.
Investors have become less convinced that the Federal Reserve (Fed) will cut the interest rate in March.

Lallalit Srijandorn FXStreet

The GBP/USD pair holds above the 1.2700 psychological mark during the early Asian session on Tuesday. The rebound of the major pair is supported by an improved risk appetite. Investors will keep an eye on the preliminary UK S&P Global PMI for January on Wednesday, which is expected to remain upbeat. At press time, GBP/USD is trading at 1.2713, gaining 0.04% on the day.

The restrictive monetary policy stance of the Bank of England provides some support to the Pound Sterling (GBP). All 70 economists who participated in the Reuters poll said that they anticipate the Bank of England (BoE) to hold the policy rate unchanged at 5.25% at its policy meeting on February 1. Nonetheless, the BoE is expected to cut the rate to 5% in Q2 of 2024 as inflation is projected to drop below the target, faster than the Q3 cut from the December poll.

Ahead of the BoE key event, the preliminary UK S&P Global PMI for January will be released on Wednesday. The Manufacturing PMI is estimated to improve to 46.7 from 46.2, while the Services PMI is projected to ease to 53.2 from 53.4. Finally, the Composite PMI is expected to show an increase of 52.2.

On the other hand, the markets have become less convinced that the Federal Reserve (Fed) will cut the interest rate in March after robust US economic data last week. According to the CME FedWatch Tool, the market has priced in a 42% chance of a rate cut at the March meeting.

However, two key events this week, including US Gross Domestic Product (GDP) for Q4 and the Core Personal Consumption Expenditures Price Index (Core PCE), might determine at least which way the central bank policymakers could lean on policy. The weaker-than-expected data might weigh on the US Dollar (USD).

Market participants will focus on the US Richmond Fed Manufacturing Index for January, due on Tuesday. The attention will shift to the UK and US PMI reports on Wednesday. Traders will take cues from these figures and find trading opportunities around the GBP/USD pair.

GBP/USD

Overview
Today last price	1.2713
Today Daily Change	0.0004
Today Daily Change %	0.03
Today daily open	1.2709

Trends
Daily SMA20	1.2714
Daily SMA50	1.2646
Daily SMA100	1.2454
Daily SMA200	1.2553

Levels
Previous Daily High	1.2733
Previous Daily Low	1.2687
Previous Weekly High	1.2766
Previous Weekly Low	1.2597
Previous Monthly High	1.2828
Previous Monthly Low	1.2501
Daily Fibonacci 38.2%	1.2715
Daily Fibonacci 61.8%	1.2705
Daily Pivot Point S1	1.2686
Daily Pivot Point S2	1.2663
Daily Pivot Point S3	1.264
Daily Pivot Point R1	1.2732
Daily Pivot Point R2	1.2756
Daily Pivot Point R3	1.2778

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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