GBP Gains Ground Against USD, Even with the Data Against it
Promising US economic reports and a hawkish statement from the Federal Reserve had placed the US dollar in a comfortable position against the pound.
The pound started to gain back some ground against the dollar on Tuesday after losing it on Monday. The GBP/USD pairing went from 1.28 down to 1.26 on Friday. The pairing immediately dropped again on Monday morning, starting off the new week in a rough spot for the pound.
By Tuesday morning, the pairing was looking better for the UK instrument, as it rose early on and has continued to gain ground. The pairing climbed from 1.25 to 1.26 with a bullish trend that looks to keep on going.
Indicators to Look for
US Treasury bonds yields dropped, giving the pound more momentum. Investors are looking forward to central banks across the world loosening monetary policy as a way to push back against inflation. The inflation concern is what has had the Federal Reserve decide not to cut interest rates just yet and to look for data that shows inflation decreasing before they decide on cuts.
Several important British companies were looking good over the last week, including S&P Global Construction PMI. The nonalcoholic beer industry in the UK is its fastest growing, with growth expected in 2024 of over 40%. Following not too far behind is the corporate travel services sector, which is expected to grow by 31% this year.
Monetary policy will continue to be restricted, says Bank of England’s chief economist, Huw Pill. He remarked that there is much debate about when bank rate cuts will happen, and he says that the financial sector is looking at the accumulated evidence of economic stability.
A market turnaround could lead to a 50 day EMA, but currently the British pound is above the 1.25 level. Because it so recently dipped to that point, it could easily go back there. At this point, it is difficult to tell where the market is headed because the two economies (US and UK) are neck and neck in a lot of areas.
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