GBP/USD surges to near 1.2760 on the upbeat UK PMI data, focus shifts to US PMI


  • GBP/USD advances as UK PMI data beats the market expectations in January.
  • UK Services and Manufacturing PMI improved to 53.8 and 47.3, respectively in January.
  • US bond yields decline on expectation of Fed’s rate cuts in May, undermines the US Dollar.

GBP/USD rises to near 1.2760 during the European session on Wednesday. The positive Purchasing Managers Index (PMI) data from the United Kingdom (UK) contribute to a rise in the Pound Sterling (GBP) against the US Dollar (USD). The preliminary S&P Global/CIPS Services PMI for January demonstrated growth, reaching 53.8 compared to the previous figure of 53.4. Additionally, the Manufacturing PMI increased to 47.3 from the earlier reading of 46.2. Concurrently, the Composite PMI showed appreciation, reporting a figure of 52.5 as compared to the previous reading of 52.1.

These upbeat Purchasing Managers Index (PMI) figures indicate that the Bank of England (BoE) may refrain from implementing monetary policy loosening measures in the upcoming February meeting. However, market participants are expected to remain cautious and await additional economic indicators to provide momentum leading up to the May meeting. There is speculation that the Bank of England might consider initiating rate cuts as early as May, with the possibility of three more cuts throughout 2024.

The US Dollar faces a challenge due to the downward movement in the bond market, driven by market expectations that the Federal Reserve (Fed) might commence rate cuts in May. There is full pricing in of a 25 basis point (bps) cut in interest rates for May, reflecting the anticipation of a more accommodative monetary policy.

However, the market is pricing in the possibility of no adjustment by the Fed in the upcoming January meeting. This suggests a cautious stance among market participants as they await further signals from the central bank. Looking forward, market participants are expected to keenly observe the release of the S&P Global Purchasing Managers Index (PMI) data from the United States (US) scheduled for Wednesday.

GBP/USD: technical levels to watch

Overview
Today last price 1.2759
Today Daily Change 0.0073
Today Daily Change % 0.58
Today daily open 1.2686
 
Trends
Daily SMA20 1.2712
Daily SMA50 1.265
Daily SMA100 1.2455
Daily SMA200 1.2554
 
Levels
Previous Daily High 1.2748
Previous Daily Low 1.2649
Previous Weekly High 1.2766
Previous Weekly Low 1.2597
Previous Monthly High 1.2828
Previous Monthly Low 1.2501
Daily Fibonacci 38.2% 1.2687
Daily Fibonacci 61.8% 1.271
Daily Pivot Point S1 1.2641
Daily Pivot Point S2 1.2596
Daily Pivot Point S3 1.2543
Daily Pivot Point R1 1.2739
Daily Pivot Point R2 1.2792
Daily Pivot Point R3 1.2837

(The story was corrected at 11:10 GMT on January 24 to say "no adjustment by the Fed in the upcoming January meeting" instead of "February meeting" in the fourth paragraph.)

 

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