- GBP/USD attracts some dip-buying on Friday amid a fresh leg down in the greenback.
- The softer US PCE report keeps the USD bulls on the defensive and acts as a tailwind.
- Traders seem reluctant ahead of Fed Chair Jerome Powell’s highly-anticipated speech.
The GBP/USD pair reverses an intraday slide to the 1.1775 region and refreshes the daily peak heading into the North American session, though lacks follow-through buying. Spot prices hold steady around the 1.1825-1.1830 region and move little in reaction to the US macro data.
The US Bureau of Economic Analysis reported that the headline Personal Consumption Expenditures (PCE) Index unexpectedly declined by 0.1% MoM in July as compared to the 1% increase in the previous month. Adding to this, The yearly rate droped to 6.3% during the reported month from 6.8% in June, missing estimates for a rise to 7.4%. Furthermore, the Core PCE Price Index - the Fed's preferred inflation gauge - also missed expectations and fell to a 4.6% YoY rate in July from the 4.9% previous.
The data points to signs of easing inflationary pressures in the US and exerts some pressure on the US dollar, offering support to the GBP/USD pair. That said, investors still seem convinced that the Fed will stick to its policy tightening path and hike interest rates further. The expectations remain supportive of elevated US Treasury bond yields, which seem to act as a tailwind for the greenback amid expectations for a hawkish message from Fed Chair Jerome Powell at the Jackson Hole Symposium.
Apart from this, a bleak outlook for the UK economy continues to undermine the sentiment surrounding the British pound. This further seems to contribute towards capping the upside for the GBP/USD pair, at least for the time being. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out in the near term and positioning for any meaningful upside.
Technical levels to watch
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.