Key events today:

12:30 UTC: USD – Change in Durable Goods Orders.

The Pound-Dollar pair is recovering to 1.2450 during the early Asian session on Wednesday. Unfavorable US PMI data for April and a growing appetite for risk are putting pressure on the US dollar (USD). Later today, data on durable goods orders in the US and weekly mortgage applications will be published.

Federal Reserve officials are looking for signs that the economy is weakening enough for inflation to decrease further, despite recent data showing higher-than-expected inflation and employment figures. The US central bank has a monetary policy meeting next week, and markets expect the Fed to keep rates unchanged in the current range of 5.25%-5.50%. Several Fed policymakers have signaled at least one rate cut this year and noted that monetary policy needs to be restrictive for a longer period. This, in turn, continues to strengthen the US dollar and limit the growth of GBP/USD.

On the other hand, speculation that the Bank of England (BoE) will cut interest rates this summer has diminished, as the UK’s chief economist once again stated the need for “restrictive” monetary policy. On Tuesday, BoE Chief Economist Huw Pill said that easing core inflation is not sufficient reason to ease policy, adding that there are greater risks from cutting rates too soon rather than too late. These comments provide some support for the British pound (GBP) against the US dollar.

Recommendations: Trade predominantly on Buy from the 1.2450 level.