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- GBP/USD: Winning streak halts as US Dollar strengthens
- Pressure on US Dollar as 2-year US yield declines
- Positive US NFP data, but ISM Services PMI eases
The GBP/USD has paused its winning streak, trading around 1.2710 during the Asian session on Monday. The Pound Sterling (GBP) initially received support against the US Dollar (USD) due to improved risk appetite, following mixed economic data from the United States (US).
The US Dollar Index (DXY) is maintaining a sideways movement near 102.40 with a negative bias, influenced by the decline in the short-term yield on the 2-year US Treasury bond, which is currently trading lower at 4.38%.
Friday’s trading session saw the US Dollar experience volatility, driven by mixed economic data. Nonfarm Payrolls (NFP) rose to 216K, marking a favorable development in the job market. However, the Services Purchasing Managers Index (PMI) for December eased to 50.6, indicating a slowdown in the services sector.
Federal Reserve Bank of Richmond President Thomas Barkin expressed his views on the US labor market, stating that it is exhibiting a steady softening pattern and is unlikely to reaccelerate at this juncture. Lorie Logan, president of the Federal Reserve Bank of Dallas, has weighed in on the monetary policy landscape, emphasizing the delicate balance central banks strive to maintain.
The positive economic indicators from the United Kingdom (UK) also contributed to the upward momentum of the British Pound (GBP). The recent improvement in UK Consumer Credit data and the S&P Global/CIPS Composite PMI for December both reflect positive signs.
Despite the recent gains, the GBP may face selling pressure due to a pessimistic economic outlook, leading investors to anticipate challenging decisions for Bank of England (BoE) policymakers. The Institute of Directors Economic Confidence Index survey has added weight to these concerns.