GBP/USD resumes upside near 1.2800 on mixed US data, Fed rate cut expectation
The GBP/USD pair resumes upside near 1.2790 despite the rebound of US Dollar (USD). Traders started to price in two interest rate cuts by the Federal Reserve (Fed) this year as the US economy grew at a slower pace in the first quarter than projected earlier. Later on Thursday, the US weekly Initial Jobless Claims and Balance of Trade will be published.
In the past few months, Fed officials emphasized the need to hold the rate higher for longer until the central bank gains confidence that inflation is moving toward the Fed’s 2% target. However, the downbeat US May ISM Manufacturing PMI report and weaker Q1 Gross Domestic Product (GDP) data have triggered the expectation of easing policy from the Fed in September, which weighs on the Greenback broadly. The markets are now pricing in a nearly 70% chance of a Fed rate cut in September, up from 54.9% at the beginning of the week, according to the CME FedWatch tool. Read more...
Pound Sterling falls back after strong US ISM Services PMI report
The Pound Sterling (GBP) drops from 1.2800 against the US Dollar (USD) in Wednesday’s American session. The GBP/USD pair comes under pressure as the US Dollar extends recovery after the release of the stronger-than-expected United States (US) Institute for Supply Management’s (ISM) Services Purchasing Managers Index (PMI) data for May.
The ISM Services PMI, which gauges the service sector activity that accounts for two-thirds of the economy, returns to expansion at a faster pace than expected. The PMI rose to 53.8, from the estimates of 50.5 and the former release of 49.4. Apart from Services PMI figures, another subcomponent, such as New Orders Index, which reflects the demand outlook, jumps to 54.1 against the prior reading of 52.2. Read more...
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