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GBP/USD trades higher near 1.2630 amid weaker UK Business Confidence, US data eyed

  • GBP/USD halts its losing streak while US Dollar stays calm after a recent surge.
  • IMF Managing Director Kristalina Georgieva expects policy rates to be reduced in 2024 due to a decline in inflation.
  • UK executives urge the BoE to lower interest rates as the Economic Confidence Index fell to 28 from the previous month's decline of 21.

GBP/USD rebounds after posting losses at the previous three successive sessions amid a stable US Dollar (USD). The GBP/USD pair trades higher near 1.2630 during the Asian session on Wednesday. The USD could face downward pressure again on the moderate comments by the International Monetary Fund (IMF) Managing Director Kristalina Georgieva.

In an interview with CNN on Tuesday, IMF Managing Director Georgieva expressed optimism about the US economy, advising Americans to "cheer up." She highlighted that despite a robust labor market, interest rates are expected to moderate in 2024 due to a decline in inflation. This positive outlook suggests a potential easing of economic pressures and provides a less aggressive perspective on the Federal Reserve’s (Fed) interest rate trajectory.

The US Dollar Index (DXY) could maintain its strength on enhanced US Treasury yields. The 2-year and 10-year yields on US bond coupons improved to 4.32% and 3.94%, respectively, by the press time. The signs of sluggish global growth towards the end of 2024 initially led investors to seek refuge in the USD. However, there's a shift as market players reevaluate their aggressive bets on imminent rate cuts by the Fed.

The Pound Sterling (GBP) faces selling pressure due to the negative outlook on the British economy. The Institute of Directors' Economic Confidence Index survey revealed a continued decline in optimism among British directors about the country's economy for the next 12 months, with the index dropping to 28 in December from the previous month's decline of 21. Corporate executives in the United Kingdom (UK) are urging the Bank of England (BoE) to lower interest rates promptly to provide support to the struggling economy.

S&P Global's commentary also added to the concerns, stating that UK manufacturing output contracted at an accelerated rate at the close of 2023. The Bank of England (BoE) is now highly anticipated to cut interest rates starting from May 2024, reflecting the view that the UK's economy is vulnerable to a technical recession.

Wednesday brings the US data releases, including the December ISM Manufacturing PMI, November JOLTS Job Openings, and the Federal Open Market Committee (FOMC) Minutes. In the absence of any high-impact data from the UK’s docket during the week, the market participants will observe low-impact events including December S&P Global/CIPS Composite PMI and Halifax House Prices.

GBP/USD: additional technical levels

Overview
Today last price1.2629
Today Daily Change0.0011
Today Daily Change %0.09
Today daily open1.2618
 
Trends
Daily SMA201.2667
Daily SMA501.2509
Daily SMA1001.2449
Daily SMA2001.2533
 
Levels
Previous Daily High1.276
Previous Daily Low1.2611
Previous Weekly High1.2828
Previous Weekly Low1.2685
Previous Monthly High1.2828
Previous Monthly Low1.2501
Daily Fibonacci 38.2%1.2668
Daily Fibonacci 61.8%1.2703
Daily Pivot Point S11.2566
Daily Pivot Point S21.2514
Daily Pivot Point S31.2417
Daily Pivot Point R11.2715
Daily Pivot Point R21.2812
Daily Pivot Point R31.2864

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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