GBP / USD Seeks To Regain 1.2000 As Conflicting Fed Comments Test Us Dollar Investors And UK/US PMI Is In Focus

GBP / USD bounces back from its weekly low as it reestablishes its intraday high near 1.1970 and posts its first daily gain in four sessions on Friday morning. As the Federal Reserve (Fed) speakers struggle to defend the hawkish bias, the Cable duo pays little attention to the Brexit-negative headlines and the Bank of England's (BoE) officials' varying opinions.

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, stated on Thursday that the central bank may be able to halt the current tightening cycle by mid to late summer. In contrast, Boston Fed President Susan Collins told Reuters that additional rate increases are necessary to rein in inflation. She added that incoming data will determine the magnitude of interest rate increases.

On the other hand, according to Reuters, Chief Economist Huw Pill stated on Thursday that survey indicators that have become available since the publication of the forecast have surprised to the upside, indicating that the current momentum in economic activity may be slightly stronger than anticipated. According to Reuters, the most recent survey conducted by the Bank of England (BoE) decision maker panel (DMP) revealed on Thursday that "businesses' expectations for their own-price inflation declined in February."

Elsewhere, former British prime minister Boris Johnson criticizes incumbent prime minister Rishi Sunak's Brexit agreement, stating, "The prime minister allowed the EU to retain too much influence in the United Kingdom." Johnson of the United Kingdom added, "We must be explicit about what is actually occurring here. This is not about the UK regaining control. This is the EU graciously refusing to yield to our wishes in our own country. Not by our laws, but by theirs." Prior to the vote in the British Parliament, the Democratic Unionist Party (DUP) of Ireland expressed skepticism about supporting the most recent agreement regarding the Northern Ireland Protocol (NIP).

After a negative start, Wall Street ended on a positive note, while the S&P 500 Futures posted slight losses as of press time. In addition, US 10-year Treasury bond yields rose to a new high since early November 2022, surpassing the 4% threshold, while the 2-year counterpart rallied to its highest level since 2007 at 4.94%. Bond coupons, however, have recently declined from their multi-month high.

Notably, the US-China tension at the Group of 20 Nations (G20) meeting, in the midst of the former's drive for sanctions on countries with strong ties to Russia and aiding Moscow in the conflict with Ukraine, previously probed the sentiment. The risk-averse sentiment appeared to have been dampened by subsequent dovish Fed comments and Sino-American trade talk discourse.

Looking ahead, the final readings of the UK S&P Global/CIPS Services PMI for February, which are expected to confirm the initial forecast of 53.3, will be followed by remarks from second-tier BoE and Fed officials to entertain GBP / USD traders. However, the US ISM Services PMI for February, which is anticipated to be 54.5 compared to 55.2 in January, will receive a lot of attention.