Ella 
GBP/USD attracted some bargain hunting in Asia on Wednesday and now appears to have interrupted the previous day’s retracement from around the 1.2300 mark or near two-week high. The U.S. dollar (USD) price action was subdued, with GBP/USD ultimately holding above the 1.2150 level but lacking bullish confidence.
The fall in U.S. bond yields and the overall positive market risk tone failed to boost the safe-haven dollar, which built on its strong rebound from one-month lows the day before. This is therefore seen as a key to boosting GBP/USD. factor. However, the dollar’s downside remains supported by signs that the U.S. economy remains resilient despite the Fed’s rise in interest rates, which will allow the Fed to stick to its interest rate hike cycle to curb inflation.
The U.S. Purchasing Managers Index released on Tuesday showed that manufacturing business activity exited the contraction zone for the first time in six months, and service industry activity accelerated slightly amid signs of easing inflationary pressures. In contrast, the UK Purchasing Managers Index (PMI) remained in contractionary territory for a third consecutive month, fueling speculation that the Bank of England (BOE) may remain on hold in November. This prevents bulls from placing aggressive bets on GBP/USD.
Looking ahead, there will be no important economic data released in the UK on Wednesday, while the US will only release new home sales data. Investors will therefore be looking to Fed Chairman Jerome Powell’s speech later in the US session for clues on the path of future rate hikes, which will therefore drive dollar demand and provide some momentum for GBP/USD . Meanwhile, focus will remain on Friday’s U.S. core PCE price index, the Fed’s preferred measure of inflation.
