GBP/USD struggles to sustain above 1.1900 despite an upbeat market mood, Fed minutes eyed

• GBP/USD is eyeing an establishment above 1.1900 for further upside.
• US yields could remain at 4% or above till 2025 as the Fed may ignore economic prospects for bringing price stability.
• An underperformance is expected from UK S&P PMI data.

The GBP/USD pair is hovering around the immediate hurdle of 1.1900 in the Asian session. The Cable is struggling to sustain above the aforementioned resistance despite a cheerful market mood. The optimism from the pair has not faded yet as the US dollar index (DXY) is witnessing intense selling pressure amid a decline in safe-haven’s appeal.

The mighty DYX is auctioning near the round-level support of 107.00 and is expected to test Monday’s low at 106.88. Escalating anxiety ahead of the release of the Federal Open Market Committee (FOMC) minutes has brought volatility to the DXY. Meanwhile, the returns on US government bonds have dropped below 3.76% amid escalating signs of a slowdown in the interest rate hike pace by the Federal Reserve (Fed).

A report from Goldman Sachs claim that long-term US yields will remain at 4% or above till the end of 2024, as reported by Bloomberg. The reasoning behind the claim is that the Fed is ignoring economic contraction in its battle against multi-decade high inflation. The investment-banking firm sees no recession in the US and the inflation will remain above target in 2023.

Apart from the FOMC minutes, investors are also focusing on Wednesday’s Durable Goods Orders data. The consumer demand indicator is expected to display a consistent improvement of 0.4%.  This could dent the Fed’s plans of cutting consumer spending as it is the only measure to trigger a slowdown in the inflationary pressures.

On the UK front, the release of the S&P PMI numbers will be significant for the market participants. The Manufacturing PMI is seen lower at 45.8 vs. the prior release of 46.2. And, the Services PMI is expected to decline to 46.2 from the former release of 46.5.