- GBP/USD has been been trading steady slightly to the north of the 1.3300 level for most of the session.
- Fed Chair Powell will testify before Congress for a second day and BoE’s Bailey will be speaking.
GBP/USD has been for the most part steady close to the 1.3300 level during Wednesday’s session thus far. The pair currently trades with modest gains of about 0.2% on the day in the 1.3330 area, having recovered from a brief dip under 1.3300 earlier in the session. Sterling has so far on Wednesday been a beneficiary of a broad recovery in the market’s appetite for risk, which is helping global equity and commodity markets recover some recently lost ground. Sterling is one of the more risk-sensitive currencies in the G10.
Trading conditions on Wednesday have been comparatively modest compared to the conditions seen on Tuesday. To recap, hawkish comments from Fed Chair Jerome Powell at his testimony before Congress sent GBP/USD at one point to fresh annual lows under 1.3200 from pre-testimony levels above 1.3350.
Ahead
Powell will testify again from 1500GMT on Wednesday and market participants will be on the lookout for any fresh hawkish takes, meaning the dollar might continue to be volatile. Meanwhile, there are also a few important US data releases on Wednesday for traders to keep an eye on. US payroll processing company ADP releases their estimate of national employment change in November at 1315GMT (which is often used by market participants to help them set expectations for Friday’s official NFP release).
Then, the November ISM Services PMI report is out at 1500GMT alongside US October Construction Spending. Wednesday’s data comes ahead of the release of the US ISM Services PMI and the latest weekly jobless claims data on Thursday and the pivotal official November labour market report on Friday. Market participants will be assessing whether the data fits into the bullish narrative on growth, the labour market and inflation that Powell painted in the first day of his testimony.
UK fundamentals are also worth keeping an eye on. BoE Governor Andrew Bailey is scheduled to speak at 1400GMT amid a high degree of uncertainty over whether or not the BoE will hike rates later in the month. Elsewhere, the final version of IHS Markit’s Manufacturing PMI survey for the UK was released this morning and was in line with expectations, while House Price data earlier in the session was a tad more inflationary than expected.
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