Pound stronger vs dollar amid easing US trade tensions

The Pound Sterling remains bid for the third consecutive day, bolstered by positive market sentiment, edging up 0.34% as the GBPUSD trades at 1.2519, above the 50-day Simple Moving Average (SMA) at 1.2501.

January’s UK S&P Global Services PMI dipped from 51.1 to 50.8 as economic conditions worsened. Traders await the Bank of England’s (BoE) monetary policy decision on Thursday, poised to reduce rates by 25 basis points (bps) from 4.75% to 4.50%, according to Prime Market Terminal data.

The greenback erased most of its Monday’s gains, spurred by the US imposing tariffs on Mexico and Canada.

However, both countries reached agreements with Washington. Therefore, investors who once seemed uncertain about US trade policies are confident that President Donald Trump is using tariffs as a “tool” to negotiate with allies and adversaries.

Data has taken a backseat, with traders eyeing the release of US Nonfarm Payroll figures for January.

Wednesday’s US docket featured ADP National Employment Change for January. The numbers exceeded estimates of 150,000 and rose by 183,000, an indication of strength in the labour market.

At the same time, business activity continued to deteriorate.

S&P Global featured Services PMI for January, which dipped from 56.8 to 52.9, better than the 52.8 expected. Up next, the Institute for Supply Management (ISM) will feature the Non-Manufacturing PMI, foreseen to increase from 54.1 to 54.3.