Event to watch out for today:
11:30 GMT+3. GBP – Composite PMI
15:30 GMT+3. USD – Initial Jobless Claims Number
17:00 GMT+3. USD – ISM Services Business Activity Index
21:00 GMT+3. USD – Publication of the Fed meeting minutes
GBPUSD:
The Pound-Dollar pair is trying to develop an overnight good bounce from the 1.2615 area, or multi-day low, and is fluctuating in a narrow range during the Asian session on Wednesday. Spot prices remain in a familiar range that has persisted over the past two weeks and are currently trading just below the round 1.2700 mark.
Worries surrounding Thursday’s upcoming UK general election are acting as a headwind for the British Pound (GBP). The US Dollar (USD), on the other hand, is struggling to attract meaningful buyers after Federal Reserve Chairman Jerome Powell made mild comments on Tuesday, stating that the US economy has made significant progress on inflation and is back on the path of disinflation.
Powell’s comments confirm market expectations that the Fed is likely to begin its rate-cutting cycle in September and reduce borrowing costs again in December. This, along with a slight decline in US Treasury bond yields, keeps USD bulls on the defensive, which in turn is a tailwind for GBP/USD. Meanwhile, expectations that a Trump presidency will be more inflationary than a Biden administration should limit the decline in US bond yields and the US Dollar.
Meanwhile, Wednesday’s economic agenda in the US, which includes the ADP private sector employment report and the ISM services PMI, could provide some impetus to the GBP/USD pair. However, the immediate market reaction is likely to be limited ahead of key events.
Trading recommendation: Watch the level of 1.2700, if the level is fixed above, take Buy positions. On the rebound take Sell positions.
Origin: FreshForex
