Ella 
GBP/USD is hovering around 1.2630 ahead of Tuesday’s London open on mixed catalysts, proving the indecision of cable traders. In addition to unclear signals, caution ahead of key US and UK data has also contributed to the pound’s recent moves.
Earlier in the day, Reuters released Barclaycard data, which also said: “UK consumer spending on credit and debit cards slowed to an annual rate of 2.8% in August from 4.0% in July.
While UK consumption details were mixed, a UK think tank’s proposal to inject more liquidity into UK capital markets through pension funds appeared to appeal to BOE hawks as it could lift inflation and in turn sterling bulls .
Elsewhere in the market, the U.S. dollar index (DXY) recorded modest gains around 104.25 after pausing a two-day winning streak the previous day, as U.S. Treasury yields strengthened ahead of key U.S. data. Still, the U.S. 10-year Treasury yield rose three basis points (bps) to 4.21% following holiday inaction.
It’s worth noting that Friday’s largely upbeat U.S. jobs report, a hawkish stance in Fed talks and a sentiment challenge from China all seem to be keeping the dollar firm in the near term. That said, the U.S. non-farm payrolls report (NFP) once again showed a hawkish bias towards the Fed, although unemployment and average hourly earnings remained a focus for policy shifts afterwards. Global ratings agency Moody’s then raised its 2023 forecast for US gross domestic product (GDP) to 1.9%, from a forecast of 1.1% in May. Still, Cleveland Fed President Loretta J. Mester defended the U.S. central bank’s hawkish moves and ruled out a rate cut in remarks Friday.
On the other hand, the market’s lack of confidence in China’s measures to safeguard the economy, as well as the recent Sino-US tensions over Taiwan and the discomfort of US companies in Beijing have all stimulated market sentiment and put a floor on the dollar. Notably, China recently announced a series of quantitative and qualitative measures to combat the impact of COVID-19. Likewise, the latest news suggests that Country Garden, China’s largest real estate company, is capable of avoiding a default.
Against this backdrop, S&P 500 futures were slightly lower, while Asia-Pacific stocks were higher.
Looking ahead, intraday traders may be cheered by the UK’s final August PMI and concerns from the Bank of Japan (BoJ) ahead of the release of US July factory orders. The GBP/USD pair could see a pullback if scheduled statistics continue to point to a less dovish Bank of England (BoE) and the Fed’s ability to keep interest rates higher for longer.
