The GBP is still high compared to pre-Brexit levels. Second, it’s riding on the coattails of the Bank of England’s (BoE) hawkish policy over the past year. This position is now the most bearish on record, having put downward pressure on the EUR/GBP currency cross that still sits above its late-2022 multi-week low. The BoE's strategy to lower borrowing costs more slowly than other major central banks supports the Pound's performance. The GBP/USD currency pair is holding firm near 1.2920 during Tuesday’s Asian trading, extending Monday’s run-up. In addition, broader market dynamics play a major role in driving currency movements too.
The Greenback has surged to record highs. That entire jump is propelled by solid S&P Services Purchasing Managers’ Index (PMI) data and the dovish speech notes of Federal Reserve officials. At the same time, the EUR/USD currency pair is showing some signs of recovery from a one-month low reached in yesterday’s trade. Monday's UK and Eurozone PMIs added to the subdued price action, as the S&P Global's services PMI rose to 53.2 from a previous 51, marking a significant uptick. On a composite basis, the PMI improved to 52, up from February’s 50.5, representing the largest gain over six months. The Manufacturing PMI tumbled from 46.9 to 44.6 from February to March, reflecting the ongoing woes of the manufacturing sector.
The EUR/GBP stays bolstered above its multi-week low hit the day before. In Tuesday’s Asian session, the pair trades in a muted trading range. It remains near Wednesday’s almost three week low of around 0.8345 which it hit earlier in the day. The downside correction across the US Dollar weighted on bets for policy easing to turn especially aggressive. Even with this shift, the stability is still there.
The ECB's policy decisions, coupled with subdued US Dollar price action, provide some support for the shared currency, balancing out market reactions. The ECB’s notable hesitance to follow the course of other central banks with an equally aggressive monetary expansion has fed continued volatility in the currency.