During European trading hours on Wednesday, the GBP/USD currency pair was fairly steady around the 1.3400 level. This movement was indicative of a broader wariness taking hold among traders. The currency pair’s lack of movement highlights the market’s anticipation of crucial economic data releases from the United States that could influence its future trajectory.
Throughout the day GBP/USD continued to be heavy below the 1.3400 mark. Such positioning would imply that traders are reining in speculation, probably waiting to hear from a number of pivotal US economic signals. Next job stats, GDP growth figures & PCE inflation figures will be carrying huge weight for directions in market sentiments. These data points will arguably have an even greater impact on currency valuations.
At this point, the additional upside of GBP/USD does seem limited as traders prepare for Friday’s key US employment figures. This report is critical, as it provides insights into employment trends and overall economic health. Analysts think that the overall strong jobs report will serve to support the US dollar, putting further pressure on the British pound.
Beyond employment numbers, all eyes on the US will be focused on the upcoming print of US GDP data. Gross Domestic Product (GDP) is one of the main indicators used to gauge the health of a country’s economy. Should GDP figures come in higher than expected, we may see the US dollar strengthen significantly. This boost would likely pressure the GBP/USD lower.
One more key data print that traders have their eyes glued on is the PCE inflation report. The Personal Consumption Expenditures (PCE) index is the Federal Reserve’s preferred inflation gauge, and one of the most important in the US. It is a big factor in guiding the Federal Reserve’s monetary policymaking. Should inflation levels rise unexpectedly, it could lead to speculation about interest rate hikes, further supporting the dollar against the pound.
Caution is the name of the game in GBP/USD trader. This includes a deep look at how major economic indicators may be affecting wider trends in market dynamics. As we get each data release, the volatility in markets will likely grow and we’ll see traders shifting their positions in preparation.
As the European trading session begins, GBP/USD struggles to stay above 1.3400. Its fate therefore rests on the outcome of a number of important US economic indicators. If the data is better than market consensus, this may provide a boost to US dollar strength. Such a change would put at risk the new-found stability of the bilateral exchange rate.