On Wednesday during European trading hours, the GBP/USD currency pair traded just below 1.3400. Despite the market’s overall negative tone, this movement highlighted the market’s more cautious flow. Traders observed that any potential upside for the pair seems limited as they await critical economic data from the United States. This includes the highly-anticipated jobs report, GDP data, and PCE inflation data.
In market reflection of the announcement, GBP/USD remained stable near 1.3400 as the day went on. This stability appeared to take place even in the shadow of uncertainty. Traders, betting heavily atop one side of the U.S. economic bet. Most are unwilling to take deep dives until clearer signals come through.
Some said that GBP/USD would only have limited room to rise. That said, market participants are still focused on the key U.S. last major data releases ahead of the April 12-13 FOMC meeting. Of course, the U.S. jobs report is always a big deal, especially right now as the country’s labor force and economy recover from the pandemic’s impact. A better-than-expected U.S. jobs report may strengthen the U.S. dollar, ultimately weighing on GBP/USD.
Besides the jobs data, the U.S. quarterly GDP figures will be key to traders turning the next corner. A higher than expected GDP growth rate can create a lot of goodwill and optimism around the American economy. This might lead to the dollar gaining value compared to the pound. As a result, traders are watching these all-important indicators, which could be catalysts for large market-moving events.
Additionally, the PCE inflation data, the other key measure for judging economic performance, continues to draw the market’s attention. The PCE index is one of the Federal Reserve’s preferred inflation indices as it assesses inflationary pressures and economic conditions. Any surprise outcomes would spark volatility across all currency pairs, GBP/USD included.
GBP/USD trades on the defensive side today, trading around 1.3400 so far. Market participants are eagerly trying to process the larger implications of the coming economic reports. The apprehensive approach of traders highlights how instrumental these indicators will be in determining future market trends.