GBP/USD received upward support after Wednesday’s release of mixed US data.
US Dollar faces downward pressure as several Fed officials have adopted a softer tone.
Pound Sterling could face challenges on expectations of a rate cut by the BoE in June.
GBP/USD hovers around 1.2650 during the Asian session on Thursday. However, the US Dollar (USD) encountered challenges in the prior session following the release of mixed economic data from the United States (US), which showed a stronger ADP Employment Change but softer ISM Services PMI figures.
US ADP Employment Change increased by 184,000 in March, surpassing February’s 155,000 rise and exceeding the market consensus of 148,000. Meanwhile, US ISM Services PMI declined to 51.4 in March from 52.6 in February, falling short of the anticipated 52.7.
The US Dollar Index (DXY) hovers around 104.20, by the press time, struggling to reverse recent losses. Multiple Federal Reserve (Fed) officials have adopted a softer tone regarding the trajectory of the Fed’s interest rates. Fed Chair Jerome Powell reiterated the central bank’s readiness to implement rate cuts, emphasizing a data-dependent approach.
Additionally, remarks from Atlanta Fed President Raphael Bostic, advocating for a rate cut in the final quarter of 2024, have drawn attention. Adriana Kugler, a member of the Fed Board of Governors, emphasized the ongoing disinflationary trend, suggesting that it would necessitate rate reductions. There are expectations of at least three cuts by the last quarter of 2024.
Global inflationary pressures seem to be subsiding, leading to speculation about potential interest rate cuts by central banks. BoE Governor Andrew Bailey has recently commented that, with further encouraging signs indicating a cooling inflation trend, the UK economy is progressing towards a point where the central bank could initiate interest rate cuts.
Money market futures traders anticipate a 25 basis point rate cut by the Bank of England (BoE) in June, with odds currently standing at 66%. Similarly, traders across the Atlantic have fully priced in a 25-basis point cut by the Federal Reserve in July. The anticipated rate cut by the BoE in June is expected to exert downward pressure on the British Pound (GBP). This could lead to an undermining of the GBP/USD pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : FXStreet – https://www.fxstreet.com/news/gbp-usd-remains-on-the-defensive-near-12650-focus-on-us-initial-jobless-claims-202404040257
