GBP/USD expected to move lower!

5月1日

The GBP/USD exchange rate shows a lack of direction, hovering below 1.2500 early on Wednesday, amidst US Dollar strength and cautious sentiment ahead of key US employment data and Federal Reserve policy communications. The exchange rate experienced a sharp decline on Tuesday, erasing previous gains amid subdued trading activity due to the closure of European markets for the May Day holiday. US Dollar strength, fueled by better-than-expected Employment Cost Index data, hindered GBP/USD recovery momentum. Market sentiment remains cautious awaiting the release of ADP Employment Change and ISM Manufacturing PMI data for April, with investors awaiting the Fed's monetary policy decision. The Fed is expected to maintain rates at the current level, but any changes in the statement language or hints from Chairman Jerome Powell could influence market sentiment. Currently, markets anticipate a 94% probability of no rate change in June, with a probability of a rate cut in September just below 50%. Powell's comments on inflation and future rate adjustments will be closely monitored, potentially impacting the performance of the US Dollar against the British Pound and other currencies. A dovish stance from Powell could weigh on the US Dollar and support a rebound in GBP/USD, while a hawkish tone could further strengthen the US Dollar and maintain pressure on the exchange rate.