GBP/USD gained ground early in the Asian session on Wednesday, trading around 1.3510, as the US Dollar (USD) softened ahead of important US macroeconomic releases.
Sluggish risk flows and anticipation of the US ISM Services Purchasing Managers’ Index (PMI) and JOLTs job openings report later in the session have kept downward pressure on the Greenback, allowing the Pound Sterling to claw higher against its US counterpart.
US dollar under pressure on mixed fed signals
The US Dollar remained on the defensive as comments from Federal Reserve officials underscored uncertainty around the future monetary policy path. Fed Governor Stephen Miran suggested that aggressive rate cuts may be necessary this year to support the economy, adding to dovish expectations.
Minneapolis Fed President Neel Kashkari echoed concerns about the labor market, warning that the unemployment rate could “pop” higher. Richmond Fed President Tom Barkin said rate adjustments will need to be finely attuned to incoming data, highlighting ongoing ambiguity in the Fed’s rate outlook.
This dovish backdrop has contributed to broad USD weakness, encouraging flows into risk-sensitive currencies like the Pound. The US Dollar Index (DXY) has been relatively subdued in recent sessions, reinforcing the soft tone.
Pound gains as traders look past geopolitical concerns
Despite elevated geopolitical tensions following the US intervention in Venezuela and the capture of President Nicolás Maduro, traders have largely shrugged off these risks in favor of focusing on macroeconomic drivers. The Pound Sterling has remained resilient, drawing support from improving UK activity data and its own fundamental outlook.
Recent S&P Global data showed the UK Composite PMI modestly improved to 51.4 in December 2025, marking the eighth straight month of expansion in private-sector activity, though the reading was revised lower from earlier estimates and missed some market expectations.
As markets digest these mixed signals, GBP/USD traders will closely monitor the upcoming US employment and services data releases for fresh guidance on the Fed’s policy trajectory, which is likely to remain a key driver for the pair’s near-term direction.
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