Published: 25/07/2022 By ECAPSterling managed to breach the 1.20 levels once more on Friday, as the pound capitalised on some poor US data which was thin on the ground last week. Friday saw the US Service PMI's massively miss forecasts, the data was touted to hit the 52.00 levels from the previous months reading of 52.7, which would have shown that whilst a slight slowdown the sector is still in expansion. The data however only managed a reading of 47.0 which not only missed forecasts massively, but also now shows the sector in contraction as the figure is below 50. GBPUSD managed to post a high of 1.2064 late Friday, and this morning, despite opening below 1.20 the pairing now sits around the mid 1.20's as I type.
Eyes in the market are now fully focused on Wednesday evening, where at 7pm we will see the US rate decision and their statement. Markets are forecasting and pricing in a 75bps hike currently from the states and should we see a hike below these forecasts, then we may see the dollar loose some ground. As always, it will not just be the physical decision that markets are paying attention too, it will also be the rhetoric that follows that's key, as investors will be trying to get a handle on the following months decision also.