The GBP/USD pair remains on the defensive below the 1.2200 barrier and trades in negative territory for the fifth consecutive week during the early European session on Monday. The major pair trades around 1.2180, losing 0.16% on the day.
The US Bureau of Economic Analysis revealed on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. Meanwhile, the annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, grew 3.9% from 4.3% in July, in line with expectations.
On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures fell short of experts' expectations. Additionally, Personal Income and Personal Spending rose by 0.4% on a monthly basis as expected.
The Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Fed Bank of Richmond President Thomas Barkin said that the central bank holding steady at the September FOMC meeting was appropriate and Fed has time to see data before deciding what’s next for rates.
However, market players will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday. The hawkish comments from officials could boost the US Dollar (USD) and act as a headwind for the GBP/USD pair.
On the GBP’s front, BoE policymakers stated that the central bank could raise or halt interest rates if necessary after the BoE decided to halt its rate-hiking cycle earlier last month. However, the market expects BoE to maintain its monetary policy in the next meeting, which exerts pressure on the British Pound (GBP).
In the absence of economic data released from the UK docket this week, the GBP/USD pair remains at the mercy of USD price dynamics. The US ISM Manufacturing PMI for September will be due on Monday, followed by the Fed Chair Powell’s speech. Later this week, the US ADP Employment Change and ISM Services PMI for September will be released on Wednesday. The attention will shift to the US Nonfarm Payrolls on Friday.
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