Pound Sterling holds onto gains ahead of US factory and GDP data
The Pound Sterling (GBP) continues its rally into a sixth day on Wednesday as investors shift their focus to United Kingdom factory data for August, which will be published on Thursday. The GBP/USD pair capitalizes on hawkish guidance from Bank of England (BoE) policymaker Katherine Mann and upbeat market sentiment. The Pound Sterling has performed better against the US Dollar as market participants are not expecting a further widening of the policy divergence between the BoE and the Federal Reserve (Fed).
UK economic activities have been facing the wrath of higher interest rates. Factory activities for August are expected to continue their contracting spell as the weak demand environment has dented the domestic and overseas markets. In addition to that, UK firms have cut their inventory backlog heavily, as well as labor to achieve efficiency in operations. They appear reluctant to add capacity due to higher borrowing costs. Pound Sterling recorded a five-day winning streak through Tuesday, and that record of gains appears to be continuing on Wednesday as well. GBP/USD is expected to continue the same as the risk appetite of market participants has improved. The GBP/USD pair climbs above the 20-day Exponential Moving Average (EMA), which trades around 1.2273. The broader GBP/USD outlook is bearish as the 50 and 200-day Exponential Moving Averages (EMAs) have delivered a Death Cross near 1.2450. Potential support is placed around 1.2000.