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In early Asian trading on Wednesday, GBP/USD was below the 1.2700 mark. GBP/USD fell, supported by renewed strength in the US dollar (USD). Later on Wednesday, the UK’s S&P Global Construction PMI and Federal Reserve Chairman Powell’s testimony will be the focus of market attention. GBP/USD is currently trading around 1.2695, with an intraday decline of 0.08%.
Atlanta Federal Reserve President Raphael Bostic said on Monday that after the Fed is scheduled to start cutting interest rates in the third quarter, it will hold steady at subsequent meetings to assess the impact of policy adjustments on the economy. Financial markets are pricing in a 30% chance of a 25 basis point (bps) rate cut at the March Fed meeting, according to the CME FedWatch tool.
A survey report released by the Institute for Supply Management (ISM) on Tuesday showed that the U.S. services purchasing managers index (PMI) fell to 52.6 in February from 53.4 in January. The data was lower than the expected value of 53.0.
On the other hand, Chancellor Jeremy Hunt will cut National Insurance premiums by 2p in Wednesday’s Budget, speaking in the Spring Budget. In addition, investors expect the Bank of England (BOE) to start cutting interest rates in August, when the inflation rate is expected to return to the 2% target, and then raise interest rates again.
Later on Wednesday, Federal Reserve Chairman Jerome Powell will deliver his semiannual testimony before Congress. The highlight of the week will be Friday’s U.S. non-farm payrolls (NFP) data, which is expected to add 200,000 jobs in February. Traders will be looking for GBP/USD trading opportunities from these events.
