Anna 
In Wednesday’s London session, the Pound Sterling (GBP) faced hurdles in extending its recovery beyond 1.2580 against the US Dollar (USD). Market participants exercised caution ahead of the release of the United States Nonfarm Payrolls (NFP) data for March, which offset the positive impact of the United Kingdom (UK) Manufacturing Purchasing Managers’ Index (PMI) returning to growth.
The unexpected expansion of the UK Manufacturing PMI in March, following a contraction spanning 20 months, was driven by robust domestic demand for consumer goods. S&P Global/CIPS reported a surge in business optimism to its highest level since April 2023, with 58% of manufacturers anticipating an increase in production levels over the next 12 months. The agency cited several factors contributing to improved sentiment, including stronger demand, new product launches, a favorable trading environment, export opportunities, and hopes for normalization in cost and supply conditions.
Throughout the week, the GBP/USD pair is expected to be influenced by US labor market data and market sentiment regarding the Bank of England (BoE)’s potential interest rate adjustments. Investors have brought forward their expectations for rate cuts to the June policy meeting, compared to previous projections for August, following softer-than-expected UK inflation data in February. This shift in expectations adds to the uncertainty surrounding the GBP’s trajectory.
