The Pound US Dollar (GBP/USD) exchange rate ticked slightly lower on Wednesday as markets digested the latest US economic releases.
Pound to Dollar (GBP/USD): 1.36457 (-0.38%)
Euro to Dollar (EUR/USD): 1.17916 (-0.21%)
Dollar to Japanese Yen (USD/JPY): 156.7235 (+0.58%)
DAILY RECAP:
The US dollar (USD) attracted some modest bids on Wednesday, following the publication of the latest ISM services PMI.
The index held steady at 53.8 in January, beating forecasts that it would slip to 53.5.
While not quite as impressive as Monday’s ISM manufacturing PMI, the services index was well received by USD investors and helped to offset the release of the latest ADP employment figures.
With January’s non-farm payroll figures delayed at least a week, more weight is being given to last month’s ADP release, which reported employment growth slowdown from 37,000 to 22,000.
The Pound (GBP) traded sideways on Wednesday, following the publication of the UK’s own services PMI.
January’s finalised services index was revised down from an initial reading of 54.3 to 54. While this marked the strongest expansion in the sector since August 2025, it fell short of the 21-month high suggested by the preliminary estimate.
The survey also struck a cautious note on employment, reporting a further decline in service-sector hiring. Many firms appear increasingly focused on efficiency gains through automation rather than expanding their workforce, tempering enthusiasm around the otherwise solid activity data.
Near-Term GBP/USD Forecast: BoE Messaging in Focus
Looking ahead to the latter half of the week, movement in the Pound to US Dollar exchange rate is likely to be dictated by the Bank of England’s first policy decision of 2026.
While interest rates are expected to remain on hold, markets will be closely watching the BoE’s guidance for clues on the policy outlook.
A firmer or more cautious tone from policymakers could offer Sterling some support as traders reassess the timing and pace of future rate cuts.
Meanwhile, the next key catalyst for the US Dollar will be the publication of the University of Michigan’s latest consumer sentiment index, with USD support potentially waning if morale deteriorated this month.
