GBP/USD remains on the defensive amid stronger USD, manages to hold above 1.2800 mark – by hareshmenghani GBPUSD Fed China BOE Currencies
The prospects for further policy tightening by the Federal Reserve lift the US Dollar to its highest level since July 10, which, in turn, is seen as a key factor weighing on the GBP/USD pair. In fact, the US GDP report released last week pointed to an extremely resilient economy and kept the door open for one more 25 bps Fed rate hike in September or November. Furthermore, Fed Chair
had also said that the economy still needs to slow and the labour market to weaken for inflation to credibly return to the 2% target. Apart from this, worries about a deeper economic downturn in China, fueled by the disappointing release ofprints for July, lend additional support to the safe-haven buck and contribute to a mildly offered tone surrounding the GBP/USD pair. That said, the latest optimism over hopes for more stimulus from China remains supportive of the underlying bullish sentiment around the equity markets.
Market participants now look to the final UK Manufacturing PMI for a fresh impetus. The US economic docket, meanwhile, features the release of the ISM Manufacturing PMI and JOLTS Job Openings data later during the early North American session. This, along with the broader risk sentiment, should allow traders to grab short-term opportunities.
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