06 August 2024, GBP/USD
GBPUSD:
The GBP/USD pair started the new trading week with a fresh dip on Monday, aiming for 1.2700, but then recovered and ended the day not far from where it started, just below 1.2800. Markets reversed course and piled on the dollar in early trade after US data came in below expectations, reinforcing broad market bets on an acceleration in the pace of rate cuts by the Federal Reserve (Fed) before the end of the year.
According to CME's FedWatch tool, betting markets are pricing in a nearly 85% probability of a double 50 basis point Fed rate cut on September 18 after U.S. data changed on Friday and new mixed prints emerged on Monday. The rest of the trading week will be light in terms of economic data, giving markets some respite and time to contemplate the current stance.
The US Purchasing Managers' Composite Index (PMI) for July came in below expectations on Monday, falling to 54.3 against a forecast of remaining at 55.0. However, the ISM Services PMI for the same period accelerated to 51.4, beating the forecast of 51.0 and rising above the previous reading of 48.8 to return to growth territory above 50.0. However, the ISM Sevices Prices Paid index for July accelerated to 57.0 from 56.3, beating the market's forecast to 55.8. The dollar is still expected to be able to strengthen ahead of the Fed rate change.
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