The Pound Sterling encountered resistance above the 1.3400 level against the US Dollar. The GBP/USD pair gave up some gains as the US Dollar rebounded from near yearly lows. The Greenback gained strength after the US Dollar Index bounced back from key support levels. Data released on Friday indicated a deceleration in US inflation, with the Personal Consumption Expenditure Price Index (PCE) showing annual inflation growth of 2.2%, slower than expected. However, core PCE inflation, which excludes volatile food and energy prices, accelerated to 2.7%, indicating that the Fed’s battle against inflation is not over yet.
Investors are keeping an eye on economic data releases this week, including ISM Manufacturing and Services PMIs, ADP Employment, Nonfarm Payrolls (NFP) data, and JOLTS Job Openings data. Jerome Powell’s speech at 17:00 GMT will provide fresh interest rate guidance, with market participants looking for clues on future rate cuts. Powell’s commentary could hint at another 50 bps reduction or a gradual 25 bps cut. Meanwhile, Brexit uncertainty continues to weigh on the Pound Sterling, as investors await interest rate guidance from Bank of England (BoE) speaker BoE Greene later in the day.
The Pound Sterling remains strong against major currencies on expectations of lower interest rate cuts by the Bank of England compared to other G-7 nations. Meanwhile, Asia-Pacific currencies like the Australian Dollar and New Zealand Dollar are performing well as China pledges to address economic issues, boosting the outlook for Asia-Pacific currencies. Investors anticipate a 25 bps rate cut by the BoE in one of the remaining two meetings this year, with BoE speaker Megan Greene expected to provide further insights in her speech at 20:10 GMT. Revised Q2 GDP data for the UK showed slower growth than initially estimated.
In technical analysis, the Pound Sterling is gaining strength to recapture the 1.3400 level against the US Dollar. The GBP/USD pair’s near-term outlook remains positive, with the 20-day Exponential Moving Average (EMA) sloping higher. The Cable faces resistance near 1.3500, while the 20-day EMA provides key support for Pound Sterling bulls. With the RSI remaining above 60.00, there is active bullish momentum in the GBP/USD pair.
Overall, the Pound Sterling continues to face uncertainty due to Brexit developments and global economic factors. Investors are eagerly awaiting speeches from central bank officials and economic data releases for further guidance on the direction of interest rates and currency movements. The US Dollar’s strength and US economic data will also play a crucial role in determining the Pound Sterling’s performance in the coming days.
