06 February 2024, GBP/USD
GBPUSD:
During the early Asian session on Tuesday, GBP/USD dropped to a multi-week low of 1.2518 before recovering to 1.2535. The US Dollar (USD) is gaining strength across the board as expectations of an imminent Federal Reserve (Fed) interest rate cut are waning.
On Monday, the Institute for Supply Management (ISM) reported that the US Services PMI increased to 53.4 in January from 50.5 in December. The services PMI data and labour market data suggest that the economic growth momentum in Q4 has carried over into the new year, reducing the likelihood of an interest rate cut in March.
On Monday, Bank of England (BoE) Chief Economist Hugh Pill stated that interest rates could fall this year as a reward to the economy for lower inflation. Pill stated that monetary policy has taken a different direction compared to last year, and rates will only be reduced if inflation continues to progress.
In the absence of high-quality economic data from the UK and the US, risk sentiment is likely to be a crucial factor for GBP/USD.
Trade recommendation: Trade sell orders from the current price level
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