Sterling holds below 1.2700 ahead of Fed’s Powell testimony

The GBPUSD pair held below the 1.2700 mark during early Asian session on Wednesday, trading near 1.2695 and losing 0.08% on the day, with the downtick backed by the renewed US Dollar (USD).

Later on Wednesday, the UK S&P Global Construction PMI and the testimony by the Federal Reserve’s Jerome Powell will be in the spotlight.

Atlanta Fed President Raphael Bostic said on Monday that he expects the first interest rate cut from the Fed, scheduled for the third quarter, will be followed by a pause in the subsequent meeting to evaluate the impact of the policy adjustment on the economy.

According to the CME FedWatch Tool, financial markets have priced in 3.0% odds of a 25 basis point (bps) rate cut at the FOMC meeting in March.

The Institute for Supply Management (ISM) survey on Tuesday reported that the US Services PMI slipped to 52.6 in February, from 53.4 in January. The figures came in weaker than the expectation of 53.0.

On the other hand, UK Chancellor Jeremy Hunt spoke at the Spring budget and cut national insurance by 2p in his budget on Wednesday.

Apart from this, investors anticipate the Bank of England (BoE) to start cutting interest rates in August when inflation is expected to return to the 2% target, before increasing again.

Later on Wednesday, Fed Chair Powell is set to speak before Congress for his semiannual testimony.

The US Nonfarm Payrolls (NFP) on Friday will be the highlight for this week, which is forecast to add 200,000 jobs in February. Traders will take cues from the events and find trading opportunities around the GBPUSD pair.

(Source: OANDA)