The Pound Sterling (GBP) faces selling pressure as market sentiment has dampened after the release of the upbeat United States private Employment data for December. The US Automatic Data Processing (ADP) reported that private payrolls rose by 164K against the consensus of 115K and the prior reading of 103K. Resilient labour demand in the US economy could allow Federal Reserve (Fed) policymakers to endore higher interest rates for a longer period. Pressure on the Pound Sterling could elevate if fears of the United Kingdom entering a mild recession escalate. The outlook of the economy is gloomy amid tough conditions over credit and household demand, which could force BoE policymakers to unwind their restrictive monetary policy stance earlier than anticipated.
The broader outlook for the GBP/USD pair is still upbeat as discussions about rate cuts from the Fed look firm while the Bank of England (BoE) is still emphasizing the need to keep interest rates higher for a longer period. Meanwhile, upbeat S&P Global UK Composite and Services PMI have added strength to the Pound Sterling’s recovery. The Composite and Services PMI at 52.1 and 53.4 outperformed expectations of 51.7 and 52.7 respectively. The Pound Sterling falls after failing to achieve sustainability above the round-level support of 1.2700. Earlier, the asset rebounded swiftly after finding buying interest near the round-level support of 1.2600. The Cable bounces back after correcting to near the 20-day Exponential Moving Average (EMA) around 1.2660.
