- GBP/USD rallies back into technical midrange near 1.2650.
- Broad-market risk appetite knocks Greenback lower.
- US ISM Manufacturing PMI fell back in February, price pressures easing.
The GBP/USD experienced a sudden uptick during Friday’s intraday trading following an unexpected shortfall in the US ISM Manufacturing Purchasing Managers Index (PMI). This surprise event rekindled risk appetite, as market participants harbored renewed optimism for potential Federal Reserve (Fed) rate cuts, driven by the prospects of alleviating inflationary pressures.
In February, the US ISM Manufacturing PMI dipped to 47.8, contrary to the predicted rise to 49.5 from the prior month’s 49.1. The softened PMI sentiment is fostering a resurgence of optimism for potential Federal Reserve (Fed) rate cuts. These expectations gain additional support from the Fed’s recent Monetary Policy Report, in which the central bank reiterated its position that inflation is gradually moving toward the upper limit of the 2% target range.
In the coming weeks, economic data releases from the UK are relatively sparse, providing limited impetus for movements in the Pound Sterling. However, trader attention is expected to shift markedly towards the substantial labor data anticipated from the US next week. The week kicks off with the Services component of the ISM PMI figures on Tuesday, followed by the ADP Employment Change preview for February on Wednesday. The grand finale for the week will be the release of the latest US Nonfarm Payrolls (NFP) data.
GBP/USD technical outlook
On Monday, GBP/USD experienced an upward move, rebounding towards the 200-hour Simple Moving Average (SMA) around 1.2650 after hitting a short-term low near the 1.2600 mark. The current technical momentum in the pair is leaning towards a flat to bearish trend, with Thursday’s peak slightly above 1.2680 serving as a crucial resistance point for bullish momentum.
Throughout the week, GBP/USD faced challenges in surpassing the 1.2700 level, encountering repeated rejections around this key handle before retracing to familiar technical levels. Bullish support appears to be anchored around the 200-day SMA near 1.2576.
