Ella 
A recovery in the U.S. dollar index pushed GBP/USD lower to around 1.2630 as U.S. Treasury yields snapped a two-day losing streak. The U.S. dollar index , which measures the greenback’s value against six major currencies, rose to around 103.60 in Asia on Wednesday.
The U.S. dollar index pared two days of losses. U.S. Treasury yields fell 2.04% on Tuesday, putting downward pressure on the dollar. The 10-year yield is currently trading at 4.13%. In addition, disappointing U.S. data on Tuesday further reinforced the dovish sentiment on the Fed’s policy stance. This adds downward pressure on GBP/USD.
The Conference Board Consumer Confidence Index in the United States fell to 106.1 in August, compared with the previous value of 114.0, which was lower than market expectations of 116.0. JOLTS job vacancies in the United States recorded 8.827 million in July, compared with the previous value of 9.165 million. Market expectations rose to 9.465 million.
Investors expect the Bank of England to raise interest rates by 25 basis points at its September policy meeting. But investors appeared cautious as the prospect of further rate hikes could have a negative impact on the outlook for the UK economy.
On the other hand, the CME Group’s FedWatch tool currently indicates that the market is pricing in an 11.5% chance of a rate hike in September. Investors expect the Fed may delay any rate hike until its September meeting. The prevailing sentiment led to downward pressure on the value of the dollar.
In addition, at the Jackson Hole symposium, Federal Reserve Chairman Jerome Powell emphasized that the Fed’s decision on the next interest rate hike will be data-driven. Therefore, GBP/USD traders are now awaiting US economic data.
With a lack of important UK data this week, investors’ focus has turned to getting a clearer picture of the U.S. economic outlook. Those upcoming data include U.S. ADP employment changes for August and preliminary second-quarter (Q2) gross domestic product annualized rates, both of which will be released later in the North American trading session.
