The pound is up against the US dollar in the Asian session on Monday. GBPUSD traded at 1.2671, having gained 0.14% as of 7.43 UTC. The currency pair’s rise is currently driven by Friday’s hawkish statement by BoE Chief Economist Huw Pill and a lower-than-expected US February ISM PMI reading. Furthermore, the macroeconomic data set for release on Monday are likely to have low-to-modest impact on the pair.
The ISM Manufacturing PMI missed expectations in February, coming in at 47.8, against the projected 49.5. This weighed down on the dollar, coming on the back of a series of misses by the US economy. Also, statements by three FOMC officials on Friday were interpreted as less hawkish, adding to the downward pressure on the dollar. On the other hand, BoE’s Huw Pill was more straight-shooting, stating that UK rate cuts were unlikely to come in the near future.
Yields on the US Treasuries could, however, tilt the scales in favour of the dollar. The yields on the benchmark five-year and ten-year bonds are currently around 4.200%, as of this writing. The GBPUSD pair will get fresh impetus on Tuesday when new macroeconomic data comes out of the US. However, in the intervening time, the market will likely keep favouring the pound, as traders adopt a risk-off sentiment.
The cooling down of geopolitical volatility in the Middle East has also denied the greenback its safe haven advantages.
GBPUSD has found a pivot at 1.2635 and the RSI indicator favours upside momentum. GBPUSD bulls will need to retain control above the pivot to push the pair to the 1.2675 resistance. A move past that level could build upside momentum to test the 1.2695 mark. However, a slip below the pivot could put the sellers in control. That will make the 1.2615 support vulnerable to a breach on extended bearish momentum. At that point, the 1.2600 support will be within reach.
This post was last modified on Mar 04, 2024, 08:50 GMT 08:50