- GBP/USD remains trapped in a tight range for the first half of the European session.
- UK PMIs, slightly better than expected, fail to provide any momentum amid a gloomy economic outlook.
- A slightly softer tone around the USD offers some support ahead of the FOMC meeting minutes.
The pair GBP/USD it struggles to gain significant traction on Wednesday and is trading in a tight range during the first half of the European session. The pair moves little and remains around the 1.1900 level following the release of preliminary UK PMI data.
The preliminary report of S&P Global research has shown that business activity in the UK manufacturing and services sectors contracted at a slightly slower pace than expected in November. Nevertheless, the data adds to a grim outlook for the British economy, which in turn is seen as a headwind for the British pound and constrains the GBP/USD pair. Nevertheless, The decline remains supported amid a slightly softer US dollarweighed down by the growing expectations in favor of a less aggressive tightening of the Fed’s monetary policy.
Investors now seem convinced that the US central bank could slow the pace of its rate hike cycle. In fact, current market valuation indicates a higher probability of a relatively minor 50 basis point adjustment at the next FOMC policy meeting in December. This has been one of the main reasons for the recent pullback in US Treasury yields and weighs on the USD. That said, aggressive signals from several Fed officials suggest that the US central bank may continue to raise borrowing costs to combat persistently high inflation.
Therefore, the markets’ attention will continue to be focused on the minutes of the November FOMC monetary policy meeting, which will be published later during the American session. Market participants will be looking for clues about the Fed’s monetary policy outlook and future rate hikes. This, in turn, will influence the price dynamics of the dollar and provide a new directional boost to the GBP/USD pair. US macro data such as durable goods orders and the usual weekly initial jobless claims could allow traders to take advantage of some near-term opportunities.
GBP/USD technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
