Pound Strengthens, Market Awaits Central Bank Signals
The GBP/USD exchange rate strengthened to around 1.3425 in early Asian trading on Wednesday. The pound's strengthening occurred following the release of better-than-expected UK PMI data, boosting positive sentiment towards the British currency. Market participants are now awaiting a statement from the Federal Reserve on Wednesday afternoon for clues on the next direction.
S&P Global data showed the UK Composite PMI rose to 52.1, surpassing estimates and the previous reading. Both the service and manufacturing PMIs also increased and were above market expectations. Improvements in the UK's dominant service sector were the main factor supporting the pound's strength against the US dollar.
However, the potential for GBP gains is still limited by expectations of a Bank of England interest rate cut. The market expects the BoE to cut interest rates by 25 basis points at its upcoming meeting. Meanwhile, divided views by Federal Reserve officials regarding the future direction of policy are keeping investors cautious in taking positions. (az)
Source: Newsmaker.id