GBP/USD Trades with Positive Bias Amidst Various Factors
The GBP/USD pair is showing a positive bias in the mid-1.3100s range during the Asian session on Thursday, although it is lacking strong bullish momentum and remains below the weekly high reached earlier.
The British Pound (GBP) is being supported by expectations that the Bank of England (BoE) will not cut rates as aggressively as the Eurozone or the United States. This sentiment was boosted by a report from the British Retail Consortium showing a 1.0% year-over-year increase in spending for August, the highest since March. Additionally, a weaker US Dollar (USD) is also contributing to the GBP’s strength.
On the other hand, the US Dollar is under pressure due to expectations of a larger interest rate cut by the Federal Reserve in September, as indicated by the recent Job Openings and Labor Turnover Survey (JOLTS) data. This has pushed US Treasury bond yields to their lowest levels in over a year, weakening the USD and providing some support to the GBP/USD pair.
However, the overall market sentiment remains cautious, limiting the downside for the USD as a safe-haven currency. Traders are also awaiting the upcoming Nonfarm Payrolls (NPF) report on Friday, leading to a lack of aggressive trading ahead of the data release.
Looking ahead, investors will be focusing on the US economic calendar for cues, including the ADP private-sector employment report, Weekly Initial Jobless Claims, and ISM Services PMI. These data releases, along with US bond yields and broader market sentiment, could influence USD demand and create short-term trading opportunities for the GBP/USD pair later in the North American session.
In summary, the GBP/USD pair is being supported by expectations of a slower rate-cutting cycle by the BoE and a weaker USD due to anticipated Fed rate cuts. However, market caution and upcoming data releases may limit the pair’s upside potential in the short term.