GBP/USD Defends 1.2100 As Fed Policy Skepticism Increases

After a corrective move to approximately 1.2100 in the early Asian session, the GBP/USD pair detected purchasing interest. The Cable is attempting to extend further above the immediate resistance level of 1.2130 as investors anticipate next week's conflicting views on Federal Reserve (Fed) monetary policy outlook.

S&P500 futures ended Thursday’s trading session on a promising note as various financial institutions came forward to provide liquidity into the US-based First Republic Bank and the Swiss National Bank (SNB) infused a new lifeline into Credit Suisse, portraying an improvement in investors’ risk appetite. The US Dollar Index (DXY) is hovering near 104.40 as investors await next week's announcement of the Federal Reserve's (Fed) interest rate decision with skepticism.

The probability of a 50 basis point (bps) interest rate hike by the Fed has nearly vanished as a result of the continuous decline in United States economic data for the month of February, which confirms that January's renewed inflationary pressures were an anomaly. Therefore, investors are divided between a policy stance of inaction as the banking crisis deepens markedly or a 25 basis point rate increase as Fed chair Jerome Powell is required to maintain pressure on the US Consumer Price Index. (CPI).

The Office for National Statistics (ONS) reported a 3 percent increase in job advertisements for the week ending March 10. The rate of increase in job postings was 19% lower than the previous year's rate.

The United Kingdom's economy is experiencing a labor deficit, which is being mitigated by increased job offerings. In order to combat the labor deficit, UK Finance Minister (FM) Jeremy Hunt has already announced a tax-free pension allowance to discourage individuals from retiring early.