26 February 2024, GBP/USD
Event to watch out for today:
17:00 EET. USD - New Home Sales
GBPUSD:
During the Asian session on Monday, the GBP/USD pair ended its four-day winning streak and is currently trading slightly lower at 1.2660. The US Dollar (USD) is holding steady despite aggressive comments from Federal Reserve (Fed) officials, which is undermining the GBP/USD pair. Furthermore, a downgrade in February's United Kingdom (UK) consumer confidence data is easing downward pressure on the Pound Sterling (GBP).
On Friday, the GfK Consumer Confidence Index for the UK was released, coming in at -21, which was below market expectations of -18 and down from the previous reading of -19. This indicates a decline in consumer confidence in UK economic activity in February. Despite this, the British Pound (GBP) received some upward support from mixed Purchasing Managers' Index (PMI) data for February, which was released in the UK on Thursday.
Economists at MUFG Bank have analysed the outlook for Pound Sterling (GBP). The latest UK PMI figures indicate an improving outlook, suggesting that the technical recession experienced in the second half of last year is coming to an end. Improving global risk sentiment is likely to enable the Bank of England (BoE) to maintain a patient stance, consistent with other central banks. Furthermore, it is probable that inflation will reach the 2% target in April.
In an interview, New York FRB President John Q. Williams suggested that a rate cut may be considered later this year, but only if necessary. Additionally, Federal Reserve Chairman Christopher J. Waller stated that the Fed should postpone rate cuts for a few more months to evaluate whether the high inflation rate in January was an outlier.
Trade recommendation: Watch the level of 1.2650, in case of breakdown we take Sell positions
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