GBP/USD around 1.1940 after mixed US data as traders watch Fed’s Powell speech

• Investors await Federal Reserve Chairman Jerome Powell’s speech.
• Mixed economic data on the US calendar did not provide support for the dollar.
• BOE pill: Expect inflation to fall in the 2nd half of 2023 and rates peaking below market estimates.
• GBP/USD Price Analysis: Pull back towards 1.1800 before retesting the 200 DMA.

The pound sterling (GBP) lower amid mixed sentiment as traders prepare for Federal Reserve (Fed) Chairman Jerome Powell’s speech to get some signals on his current interest rate stance. In addition, the busy economic schedule in the United States did not support the dollar. At the time of writing, GBP/USD is trading at 1.1942 after reaching a daily high of 1.2029.

Federal Reserve Chairman Jerome Powell delivers remarks at 18:30 GMT

Sentiment remains fragile, as shown by the faltering in US stocks. The latest Federal Reserve officials commented that the US central bank is willing to moderate the pace of rate hikes, but also said that rates would end up above September forecasts. Even St. Louis Fed President James Bullard commented that the Fed is “on track to tighten,” added that the Fed needs to raise rates through 2023 and expects the federal funds rate ( FFR) reaches a maximum of between 5% and 7%. However, markets are underestimating Fed policy makers. Therefore, any hawkish comments from Jerome Powell could rock the boat and bolster the US dollar.

Dismal ADP jobs report kept dollar on defensive

The ADP jobs report for November disappointed investors as the economy added just 127,000 jobs, below expectations, and fell short of the 239,000 employees hired by private companies in October. Nela Richardson, chief economist at ADP, said the November report suggests the Fed’s aggressive policy “is having an impact on job creation and wage gains.”

The United States economy in the third quarter grew above estimates

On the other hand, the US Gross Domestic Product (GDP) for the third quarter, in its second estimate, increased by 2.9%, above forecasts of 2.7%, pulverizing the advanced reading for the third quarter of 2.6%. Although the report trashed US recession speculation, it did nothing to bolster the dollar, and GBP/USD continued to trade in the green, well below the daily high of 1.2024.

BOE Chief Economist Huw Pill sees rates peaking lower than market projections

The UK economic agenda featured Bank of England (BoE) chief economist Huw Pill. He stated that inflation is expected to fall rapidly in the second half of 2023 while supply chain issues are resolved. As for the Bank’s rate hike, he said the BoE is expected to raise rates, below money market futures expectations of 5.25%. Pill echoed BoE Governor Andrew Bailey’s comment on forecasting a lower peak for bank rates at his latest policy meeting. Therefore, further GBP weakness is expected.

GBP/USD Price Analysis: Technical Perspective

From a daily chart standpoint, GBP/USD continues to have a neutral or bullish bias, as the major currency has failed to break above the 200 day EMA around 1.2157. After reaching a daily high of 1.2029, far from the weekly high of 1.2117, the British pound has fallen sharply, posting new lows around 1.1941. The Relative Strength Index (RSI) is heading lower, albeit in bullish territory, suggesting that buying pressure is easing. Therefore, in the short term, GBP/USD could pull back before resuming higher. Therefore, the first support for the GBP/USD would be the figure of 1.1900. A break of the latter would expose the November 23 daily low at 1.1872, ahead of the November 21 swing low at 1.1762.