GBP/USD consolidates gains around the mid-1.2700s ahead of UK, US PMI data

• GBP/USD hovers around 1.2755 on the weaker USD, the Bank of England’s (BoE) hawkish bias.
• The BoE decided to keep interest rates steady at a 15-year high of 5.25% on Thursday.
• Fed Chair Jerome Powell said the rate hike cycle was likely over in the US and lower rates were coming into view.
• Market players await the UK S&P Global/CIPS PMI and US S&P Global PMI reports, due later on Friday.

The GBP/USD pair consolidates its gains around 1.2755 after retracing from 1.2793, the highest level since August during the early Asian session on Friday. The hawkish bias from the Bank of England (BoE) lends some support to the British Pound and lifts the GBP/USD pair.

As widely expected, the BoE decided to keep interest rates steady at a 15-year high of 5.25% on Thursday. The BoE governor, Andrew Bailey, said that there was still some way to go before inflation hit its target. Bailey further stated that the central bank will continue to monitor the data closely and take the decisions necessary to bring inflation back to 2%. The BoE’s guidance contrasted with the dovish remarks from the Federal Reserve (Fed), which boost the British Pound (GBP) and act as a tailwind for the pair.

Among the major central banks, the Fed is currently seen as the early central bank to lower interest rates. On Wednesday, the Fed maintained the interest rate unchanged at its last meeting of the year. Fed Chair Jerome Powell said the rate hikes cycle was likely over in the US and lower rates were coming into view, with 75 basis points (bps) of rate cuts anticipated by policymakers next year. Nonetheless, Fed fund futures are pricing in 1.5 percentage points of rate cuts in 2024. This, in turn, exerts some selling pressure on the Greenback across the board.

Investors will monitor the preliminary UK S&P Global/CIPS PMI report on Friday. The Composite PMI is expected to grow to 50.9 from 50.7 and the Manufacturing PMI is projected to rise to 47.5 from 47.2. Also, the US S&P Global PMI report will be due later in the day. These figures could give a clear direction to the GBP/USD pair.