GBP/USD Shows Bullish Leanings Near 1.2930 as USD Softens

On Monday, the GBP/USD currency pair demonstrated a positive bias, trading around the 1.2930 mark during the Asian trading session. This came after the pair had experienced a two – day losing streak, hitting a one – and – a – half – week low on Friday. The current upward movement suggests that the pair has managed to attract dip – buyers, with spot prices up nearly 0.10% for the day so far.

USD Weakness: A Tailwind for GBP/USD

The US Dollar (USD) began the new week on a softer footing, halting its three – day recovery from a multi – month low. This USD weakness was a key factor contributing to the GBP/USD pair’s upward momentum. Despite the Federal Reserve (Fed) raising its inflation projection, market investors are of the view that trade – tariff – induced economic slowdown in the US might prompt the Fed to restart its rate – cutting cycle in the near future. Additionally, the positive sentiment surrounding US equity futures has reduced the appeal of the safe – haven USD, further weakening the currency.

BoE’s Hawkish Stance Bolsters the Pound

The British Pound (GBP), on the other hand, found support from the relatively hawkish stance of the Bank of England (BoE). The BoE has cautioned against premature assumptions of interest rate cuts and has also increased its forecast for the peak of inflation in the current year. This indicates that the BoE may be slower in reducing borrowing costs compared to other central banks, including the Fed. Such a stance makes holding the GBP more attractive, thereby providing additional support to the GBP/USD pair. Moreover, the GBP/USD pair’s recent break above the 200 – day Simple Moving Average (SMA) for the first time since November is seen as a bullish signal by traders, further fueling the positive sentiment.

Upcoming Data and Speeches to Influence the Pair

Looking ahead, traders are eagerly awaiting the release of flash Purchasing Managers’ Index (PMI) data from both the UK and the US. The Composite PMI, released monthly by the Chartered Institute of Procurement & Supply and S&P Global, is a crucial leading indicator of private – business activity in the manufacturing and services sectors. A reading above 50 for the UK PMI would suggest expansion in the private economy, which is bullish for the Pound Sterling (GBP).

In addition to the PMI data, speeches by influential Federal Open Market Committee (FOMC) members will play a significant role in driving USD demand. Meanwhile, comments from BoE Governor Andrew Bailey will also be closely watched. These factors combined are expected to create short – term trading opportunities for the GBP/USD pair. Given that the spot prices are close to the highest level since November touched last week and the overall fundamental outlook is favorable, there is potential for further gains in the GBP/USD pair.

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