GBPUSD:
The Pound-Dollar pair is recovering to 1.2450 on Wednesday during the early Asian session. Unfavorable US PMI data for April and rising risk appetite are weighing on the US Dollar (USD). Later in the day, data on US durable goods orders and weekly mortgage applications will be released.
Federal Reserve (Fed) officials are looking for signs that the economy is weakening enough that inflation could fall further, even though data in recent weeks has shown better-than-expected inflation and employment numbers. The U.S. central bank will hold a monetary policy meeting next week, and markets expect the Fed to leave the rate unchanged in the current 5.25%-5.50% range. Several Fed policymakers have signaled at least one rate cut this year and indicated that monetary policy should be restrictive for longer. This, in turn, continues to strengthen the US Dollar and limit GBP/USD gains.
On the other hand, speculation that the Bank of England (BoE) will cut interest rates in the summer diminished as the UK’s Chief Economist reiterated the need for “restrictive” monetary policy. On Tuesday, Bank of England Chief Economist Hugh Pill said that weakening core inflation is not enough reason to ease policy, adding that there are big risks from cutting rates too soon rather than too late. These comments provide some support for the Pound Sterling (GBP) against the US Dollar.
Trading recommendation: Trade predominantly on Buy from the level of 1.2450.
Origin: FreshForex
