GBP/USD flat as markets await key data release and Federal Reserve minutes to give direction
In Monday's session, GBP/USD traded with slight losses at 1.2597. The market showed limited market movement due to the absence of high-tier economic news and the Presidents' Day holiday, putting US traders out of the picture.
For the rest of the week, on Thursday, preliminary February PMI surveys for UK and US manufacturing and services will be seen as fresh impetus. On Wednesday, the Federal Reserve System (Fed) will publish the minutes of the January policy meeting. Markets are currently delaying the start of the easing cycle for both the Fed and the Bank of England (BoE) as both blocs show little evidence that inflationary pressures are abating. On the one hand, the Fed's minutes could explicitly show markets how open the bank's officials are to start tapering, while PMIs will provide more information about the health of both economies. Both reports can support volatility in the pair as they can affect bets and the timing of the start of the Fed and BoE tapering cycles. Read more…
Sterling turns negative as risk appetite wanes in the holiday-shortened week
The pound sterling (GBP) faces a sell-off in Monday's early New York session against the exchange rate American dollar as market sentiment deteriorates. GBP/USD pair retreat despite Bank of England The (BoE) is expected to keep interest rates at current levels for a longer period of time. Persistent price pressures in the UK economy from stubborn services inflation, steady labor demand and massive household spending would allow BoE policymakers to maintain the hawkish narrative for longer.
Last week, surprisingly upbeat UK retail sales data suggested the impact of higher BoE interest rates on consumer spending was fading. This suggests that the UK economy will emerge from a technical recession sooner than originally thought. The UK economy entered a technical recession in the second half of 2023 as the BoE kept interest rates higher to tame high inflation, which significantly affected consumer spending and business operations. Read more…
