GBPUSD – Flat
Events to watch out for today:
11:30 GMT+3. GBP – Manufacturing PMI
17:00 GMT+3. USD – ISM manufacturing index
GBPUSD:
The GBP and USD pair started the new week on a subdued note and fluctuated in a narrow range around 1.2740 during the Asian session. At the same time, downward trends remain subdued amid a moderate weakening of the US Dollar (USD), driven by signs of easing inflationary pressures in the United States (US).
On Friday, the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) price index was unchanged at an annualized rate of 2.7% in April. In addition, the Core PCE price index, which excludes volatile food and energy prices, matched the consensus estimate and rose 2.8% year-over-year. This data should allow the Federal Reserve (Fed) to cut interest rates later this year. In addition, the overall positive tone on risks seems to be undermining the safe-haven US Dollar, which in turn is a tailwind for the GBP/USD pair.
The British Pound (GBP), on the other hand, is receiving support from expectations that more sustained price pressures in the United Kingdom (UK) may force the Bank of England (BoE) to keep interest rates at current levels for a while longer. Nevertheless, uncertainty ahead of the UK general election on July 4 is keeping GBP bulls away from aggressive betting and limiting GBP/USD’s upside. Traders are awaiting the release of the UK and US manufacturing activity indices to provide a boost before the release of the US ISM manufacturing index.
Trading recommendation: Trade mainly with buy orders at the price level of 1.2780. We consider sell orders at the price level of 1.2700.
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