The US Dollar strengthened, causing Pound Sterling sellers to regain control and pushing the GBP/USD exchange rate below the 1.2600 barrier.

The US ISM Manufacturing PMI increased less than anticipated in July, reviving recession concerns. The US Dollar remained a safe haven currency, while JOLTS Job Openings decreased to 9.582 million in June, affecting the US dollar slightly.

The US ADP Employment Change data showed the US Dollar’s resurgence, with the dollar reaching new monthly highs compared to its six main rival currencies.

The Bank of England’s monetary policy statements on Thursday increased selling pressure on the GBP/USD pair, with rates raised by 25 basis points to 5.25%. Governor Andrew Bailey’s ambiguous policy direction negatively impacted the Pound Sterling, sending it to two-month lows of 1.2620.
The pound sterling experienced a slight decline due to mixed US economic statistics, including mixed Jobless Claims and Q2 Unit Labor Cost Index results. The Greenback fell, while the ISM Services PMI fell to 52.7 in July from its predicted 53.0.

The US dollar declined, causing pound sterling buyers to gain territory over 1.2700. No significant economic figures are expected on either side of the Atlantic. The Chinese Trade Balance report on Tuesday may impact market sentiment, potentially impacting the Pound Sterling.

The US Trade Balance report will provide substance to the light schedule later that day, and China’s CPI and PPI statistics will be significant due to the absence of significant US and UK economic events. The UK GDP for the second quarter, monthly release, and Industrial Production figures are set to be released on Friday, making it the busiest day for data releases.

The Pound Sterling may face significant headwinds if the UK economy enters recession. The GBP/USD exchange rate will also be influenced by Fed and BoE policymakers’ statements and market mood.

In the lack of economic events in the US and UK on Wednesday, China’s CPI and Producer Price Index (PPI) statistics will be key. The publication of US inflation statistics on Thursday will influence the Fed’s view for interest rates and have an impact on the price movement of the GBP/USD, so traders will get ready. On the same day, the Federal Budget Balance and the US weekly Jobless Claims statistics will also be released. With the preliminary estimate of UK GDP declining, the monthly release, and Industrial Production statistics, Friday will be the busiest day.

The Pound Sterling will experience significant headwinds if there are any signs that the UK economy is about to enter a recession. The University of Michigan Consumer Sentiment and Inflation Expectations report and the US PPI inflation data will keep traders busy in American trading. Market mood and policymaker remarks from the Fed and BoE will also have an impact on the GBP/USD exchange rate.

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