Why Is GBP/USD Gaining Momentum? | Hawkish BoE Stance & USD Weakness Explained
The Cardano coin ada price prediction 2021British pound continues its ascent against the US dollar, with the GBP/USD pair hovering near the 1.2500 psychological level during early Monday trading. This marks the currency pair's third consecutive session of gains, fueled by contrasting monetary policy expectations between the Bank of England and Federal Reserve.
Recent commentary from BoE officials has reinforced market expectations of prolonged monetary tightening. Chief Economist Huw Pill's weekend interview with the Financial Times emphasized the central bank's unwavering commitment to combating inflation, dismissing notions of premature policy easing. Governor Andrew Bailey similarly maintained his hawkish posture, signaling that elevated interest rates may persist longer than market participants anticipate.
Supporting the pound's strength, Thursday's PMI data revealed unexpected expansion in UK service sector activity after three months of contraction. The services PMI crossed the crucial 50-point threshold into expansion territory, while composite PMI similarly surprised to the upside. Though manufacturing indicators remain below expansion levels, the overall business activity picture shows signs of stabilization.
Across the Atlantic, the US dollar continues facing headwinds despite rising Treasury yields. Market participants appear focused on growing expectations for Fed policy easing in 2024, even as central bank officials maintain their data-dependent stance. The 10-year Treasury yield's climb to 4.49% hasn't translated into dollar strength, suggesting currency traders are pricing in a potential policy pivot.
This week's economic calendar features several high-profile US releases that could influence the pair's trajectory, including Q3 GDP figures and core PCE inflation data. With no major UK economic indicators scheduled, market attention will likely remain fixed on commentary from BoE policymakers and evolving expectations for transatlantic monetary policy divergence.
The currency pair's technical setup suggests potential for further upside if bullish momentum sustains above the 1.2500 handle. However, traders should monitor upcoming US economic data for signs that could either reinforce or challenge current market expectations regarding Fed policy direction.
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