01 July 2024, GBP/USD
Event to pay attention to today:
17:00 GMT+3. USD - ISM Manufacturing PMI
GBPUSD:
The GBP/USD pair is trading at a stronger level around 1.2655 at the start of the Asian session on Monday. The US Dollar (USD) is declining as the US Personal Consumption Expenditure (PCE) price index for May fell to its lowest annualised level in more than three years, providing some support to the major pair. Traders are awaiting fresh impulses from the June ISM Purchasing Managers' Index (PMI), due for release on Monday.
The core PCE index, which is the US Federal Reserve's (Fed) preferred measure of inflation, continued to cool in May, fuelling speculation that the Fed will cut interest rates this year. Core PCE rose 2.6 per cent from 2.8 per cent in April, matching the forecast. Core PCE rose 2.6% y/y in May from 2.7% in the previous month, matching the forecast.
In recent weeks, Fed officials have emphasised that they will cut interest rates when they gain confidence that inflation has slowed to the 2% target. New York Fed Chairman John Williams said inflation is still at problematic levels and the U.S. central bank will act to bring it down. In a recent statement, Fed Chair Michelle Bowman indicated that the current policy of the Federal Reserve should be sufficient to bring inflation back to the target level. She also suggested that the central bank should not be reluctant to cut rates further if inflation data remains unyielding.
The UK general election will be held on Thursday, which is likely to cause volatility in the pair. According to the latest exit polls, the opposition Labour Party is expected to defeat the Conservative Party led by Prime Minister Rishi Sunak.
Trading recommendation: Trading mainly with sell orders at the price level of 1.2620. We consider buy orders at the price level of 1.2670.
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