Ella 
GBP/USD is trending lower on Thursday after pulling back from a fresh two-week high of 1.2774. GBP/USD fell to around 1.2710 in Asia on Thursday. Sterling initially found support after positive UK Purchasing Managers Index (PMI) data. However, the upward momentum failed to sustain following the release of upbeat Purchasing Managers Index (PMI) data from the United States.
The UK’s preliminary S&P Global/CIPS Services Purchasing Managers’ Index for January was 53.8, higher than the previous reading of 53.4, indicating growth. The manufacturing PMI also rose, to 47.3 from 46.2 previously. Meanwhile, the composite PMI for services and manufacturing also rose to 52.5, from 52.1 previously.
The positive PMI suggests the Bank of England (BOE) may choose to avoid monetary policy easing at its upcoming February meeting. However, investors appear to be expecting the Bank of England to kick off a rate-cutting cycle at its August meeting. Market expectations mean the BoE will cut interest rates by 175 basis points over the course of the cycle, taking the policy rate to 4.50% by December 2024.
The GBP/USD pair fell after upbeat S&P Global Purchasing Managers Index (PMI) data out of the US on Wednesday could reduce the prospect of a rate cut by the Federal Reserve (FED) in March. In addition, market sentiment reflected in the CME FedWatch Tool shows that bets on a rate cut by the Fed in March have fallen below 40%, down sharply from around 80% a month ago. Investors are likely to focus on the annual U.S. fourth-quarter gross domestic product rate, due out on Thursday.
The U.S. S&P Global Manufacturing Purchasing Managers’ Index (PMI) surged to 50.3 in January, an 11-month high, beating expectations of 47.9. The U.S. services purchasing managers index rose to 52.9, exceeding the expected value of 51 and the previous value of 51.4. Overall, the U.S. composite PMI rose to 52.3 from the previous reading of 50.9. This composite indicator summarizes the status of the manufacturing and service industries and shows that economic activity in each industry is expanding.
