GBP/USD holds steady above 1.2900 due to a technical pullback in US Dollar

GBP/USD remains steady as the US Dollar undergoes a slight correction.

Fed’s Bostic cautioned about ongoing economic uncertainty, indicating that inflation progress could be slower than expected.

The Pound Sterling found support from strong UK PMI data, highlighting signs of economic recovery.

GBP/USD remains stable around 1.2920 during Tuesday’s Asian session after gains in the previous session. However, the pair holds ground amid a downward correction in the US Dollar (USD). The Greenback strengthened, supported by robust S&P Services PMI data and cautious remarks from Federal Reserve officials.

The S&P Global Services PMI surged to 54.3 in March, a three-month high, up from 51.0 in February and exceeding market expectations of 50.8. The service sector rebounded sharply from its 15-month low, while the Composite PMI rose to 53.5, marking its strongest expansion since December 2024.

Atlanta Fed President Raphael Bostic warned of persistent economic uncertainty, suggesting inflation progress may be slower than anticipated. He revised his 2025 rate cut expectations downward, citing ongoing price pressures and trade-related risks.

The risk-sensitive GBP/USD pair could encounter headwinds as traders remain cautious ahead of US President Donald Trump’s scheduled tariff announcement on April 2. While Trump hinted that "a lot" of countries could receive exemptions, details of the tariff plans remain uncertain.

Meanwhile, the Pound Sterling (GBP) gained support from strong UK PMI data, signaling an economic recovery. The latest figures showed significant growth in the services sector, driven by demand in financial and consumer services. As a result, traders now see a 60% chance of a quarter-point interest rate cut by the Bank of England (BoE) in May, down from earlier expectations of a more aggressive easing path.