Market Analysis

Pound Sterling Steadies as Investors Await US ISM Services PMI and Employment Data

Amos Simanungkalit · 05 Jun 202412.1K Views

The British Pound (GBP) is trading narrowly above 1.2750 in London's Wednesday session amid a quiet economic calendar in the UK this week. With minimal domestic catalysts, movements in the GBP/USD pair are likely to be driven by the US Dollar's (USD) performance. The USD remains active amidst a data-heavy week in the United States.

The US Dollar Index (DXY), which gauges the USD against major currencies, holds above key support at 104.00. However, uncertainty surrounds the near-term outlook due to increasing speculation that the US Federal Reserve could begin cutting interest rates in September.

According to CME FedWatch, futures pricing indicates a 65% chance of rate cuts in September, up from 47% a week earlier. This shift follows weaker US ISM Manufacturing PMI data for May and downward revisions to Q1 GDP figures, fueling expectations of Fed action.

Technical analysis shows the Pound Sterling trading within Tuesday's range, reflecting market indecision. The GBP/USD pair faces resistance near the 78.6% Fibonacci retracement level at 1.2770, drawn from the March high of 1.2900 to the April low of 1.2300. Bullish sentiment persists as the 20-day Exponential Moving Average (EMA) at 1.2700 trends upwards, indicating strength in the uptrend. The 14-period Relative Strength Index (RSI) has stabilized between 40.00 and 60.00, suggesting favorable momentum toward higher levels.