GBPUSD Hangs On to Gains As Market Waits For Powell and Hunt Statements

Summary:
• A look at GBPUSD as UK Chancellor Jeremy Hunt is set to read the budget statement and Fed Chairman Jerome Powell testifies in congress.

The British pound inched up against the US dollar at the opening of the London trading session on Wednesday. GBPUSD gained +0.05%, to trade at 1.2711, propelled by weak dollar fundamentals. Both the UK and the US had lower-than-expected PMI readings released on Tuesday, but the dollar had additional high-impact releases weighing down on it.

A lot going against the dollar

According to S&P Global Services PMI, the US service industry beat the forecast 51.3 to register at 52.3 in February. Nonetheless, it was still a decline of 0.2 from the January figure.  The UK’s corresponding reading missed the forecast, registering 53.8 against the projected 54.3. However, the US missed the ISM Non-Manufacturing PMI by 0.4 to come in at 52.6. In addition, the ISM Non-Manufacturing Prices figure for February missed the forecast by a wider margin of 3.4 to register at 58.6.

The dollar also faces pressure from low-yielding US Treasuries. Yields on indicative 10-year and 5-year bonds have fallen to 4.15% as of this writing. This is likely to keep pressing down on the dollar for much of the day ahead of Federal Reserve Chairman Jerome Powell’s testimony in Congress. The two-day testimony will likely take some of the attention away from the JOLTs Jobs Openings and ADP Nonfarm Employment reports scheduled for release Wednesday.

What next for GBPUSD?

Meanwhile, the UK will have its own high-impact verbal moment on Wednesday when Chancellor Jeremy Hunt presents the Spring Budget Statement. This is expected to provide cues on the UK’s economic policies in the coming months, which could impact the pound. GBPUSD could also be impacted by the release of S&P Global/CIPS UK Construction PMI, which is forecasted to improve from 48.8 to 49.9.

Technical analysis

The GBPUSD currency pair signals a mixed-to-bullish momentum on the 30-minute chart. The pivot is at 1.2680. If the buyers control the price above this level, they could break the 1.2710 resistance, which could see them test 1.2735. However, if the sellers seize control and bring the pair under 1.2680, the 1.2665 support could break. That could push the next target to 1.2650.