**GBP/USD BOUNCES OFF SESSION LOWS TO TRADE AT 1.2670 AHEAD OF UK GDP DATA**
*Adapted from the original article by Anil Panchal, Forex Factory*
—
GBP/USD, known as the “Cable,” showed signs of resilience in early Thursday trading, rebounding from its session lows to hover near 1.2670. This cautious uptick comes as traders brace for the release of critical UK Gross Domestic Product (GDP) data, which could become a key driver for the British Pound in the near term. The market landscape remains sensitive to both US and UK economic cues, with the Federal Reserve and the Bank of England adopting different tones in their policy outlooks. This divergence, coupled with upcoming macroeconomic data, sets the stage for heightened volatility in the GBP/USD currency pair.
## GBP/USD RECOVERS FROM INTRA-DAY LOSSES
After a brief dip towards session lows, the GBP/USD managed to climb back toward 1.2670 during the European morning session. The currency pair had earlier faced selling pressure following hawkish commentary from US Federal Reserve officials, which provided a temporary boost to the US Dollar. However, the Pound’s quick recovery highlights underlying market uncertainty as traders position themselves ahead of UK GDP data.
### Key Points:
– GBP/USD regained ground after dipping to session lows around 1.2640
– Pair trades near 1.2670 as of early Thursday in Europe
– Market awaits UK economic growth figures for further directional cues
## FEDERAL RESERVE COMMENTARY SUPPORTS DOLLAR
Recent comments from US policymakers, particularly from Federal Reserve officials, have reined in expectations for aggressive rate cuts in 2024. The cautious approach sparked renewed strength in the US Dollar, pressuring risk-sensitive assets and rival currencies like the Pound in early trading. Nevertheless, sustained Dollar gains remain uncertain amid mixed signals from US economic data.
### Highlights from the US:
– Federal Reserve officials emphasized data dependency and patience on rate cuts
– Some officials flagged persistent inflation risks as a reason to maintain higher rates for longer
– US Treasury yields rose modestly, supporting a firmer Dollar
– US Consumer Price Index (CPI) and Producer Price Index (PPI) inflation reports loomed later in the week, maintaining a cautious market outlook
## UK GDP DATA: HIGH STAKES FOR THE POUND
The upcoming UK GDP release is in sharp focus for Pound traders, as it will provide fresh insights into the health of the British economy. Markets anticipate that the figure will play a crucial role in shaping the Bank of England’s (BoE) policy stance and, consequently, the GBP/USD exchange rate’s next move. Disappointing numbers may increase pressure on BoE to consider earlier rate cuts, potentially weighing on the Pound.
### What to watch in the GDP Report:
– Monthly, quarterly, and yearly GDP growth prints
– Details on service sector performance, which dominates the UK economy
– Evidence of continued resilience or signals of economic slowdown
– Market expectations versus actual outcomes and the impact on BoE rate cut probabilities
## BOE’S STEADY TONE CONTRASTS WITH FED’S HAWKISHNESS
The Bank of England has struck a relatively steady tone in recent meetings, signaling a willingness to keep interest rates elevated if inflation proves persistent. Policy divergence with the Federal Reserve has become a subject of speculation, as the US central bank appears more hesitant to cut rates soon. Sterling’s performance hinges on how these differing stances evolve in tandem with economic data.
### Major Points on Central Bank Policy Outlooks:
– BoE policymakers remain cautious about declaring victory over inflation
– UK inflation exceeds the central bank’s target, demanding vigilance
– Fed officials highlight “higher for longer” in rate policy due to lingering price pressures
– Divergence in rate expectations could dictate short- to medium-term Cable movements
## BROADER MARKET SENTIMENT: RISK AVERSION L
Read more on GBP/USD trading.