GBP/USD rebounds to 1.27 area, remains on track to post weekly gains
- The BoE didn't touch on the policy outlook in its Quarterly Bulletin.
- US Dollar Index struggles to stage a meaningful rebound.
- Both the Manufacturing and Services PMI figures in the US fell short of expectations.
After dropping to 1.2650 area earlier today, the GBP/USD pair gained traction in the second half of the day and turned flat on the day near the 1.27 handle. On a weekly basis, the pair remains on track to close nearly 100 pips higher.
The greenback's recovery attempt met resistance after the disappointing data releases from the U.S. and dovish remarks from Fed officials reminded investors of the Fed's dovish outlook. As of writing, the US Dollar Index was at its lowest level in two weeks at 96.46, losing 0.16% on a daily basis.
In its preliminary report, the IHS Markit today announced that the business activity in both the service and the manufacturing sector in the U.S. is expected to lose momentum and expand at a slower pace when compared to May.
Assessing the data, “Recent months have seen a manufacturing-led downturn increasingly infect the service sector," said Chris Williamson, Chief Business Economist at the IHS Markit. "The strong services economy seen earlier in the year has buckled to show barely any expansion in June, recording the second-weakest monthly growth since the global financial crisis."
Additionally, explaining his stance on the monetary policy in an essay, Minneapolis Fed President Neel Kashkari said that he advocated for a 50 basis points rate hike in the last FOMC meeting. Moreover, Fed Vice Chair Clarida reiterated that the Fed will act appropriately to sustain the economic expansion. According to the CME Group FedWatch Tool, markets are now pricing virtually 0% chance of the Fed keeping the policy rate unchanged in July.
Technical levels to watch for
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