GBP/USD appears optimistic on UK PM Sunak’s Cabinet reshuffle, mildly bid near 1.2050 amid mixed Fedspeak
|- GBP/USD picks up bids to defend the previous day’s rebound from one-month low.
- UK Prime Minister Rishi Sunak reshuffled British Cabinet on Tuesday but gained little accolades.
- Fed Chair Powell sounds mixed despite signaling higher rates.
- US President Joe Biden’s SOTU, risk catalysts are the key.
GBP/USD holds onto the previous day’s recovery moves near 1.2050 during Wednesday’s initial Asian session, despite the pause in the US Dollar’s weakness and sluggish markets. The reason could be linked to the fresh optimism surrounding the UK Prime Minister Rishi Sunak’s Cabinet reshuffle and mixed comments from the Federal Reserve (Fed) officials.
UK PM Sunak broke the British Cabinet into two departments to justify his pledge to bolster the economy and reduce energy prices, not to forget defending the Tory party's interest before the anticipated election in the next year. “Sunak created a new energy security and net zero department, led by former business minister Grant Shapps, and three other departments, with one focusing on science and innovation, a personal passion for the British leader,” said Reuters while giving details of the action.
On the other hand, Minneapolis Federal Reserve (Fed) President Neel Kashkari told CNN, "We may have to hold rates at a higher level for longer," while adding that he is not forecasting a recession. Following that, Federal Reserve Chairman Jerome Powell said, “Expect 2023 to be a year of significant declines in inflation,” while also adding that if data were to continue to come in stronger than expected, would certainly raise rates more.
Elsewhere, China’s rejection of the Pentagon request keeps the geopolitical tension high and the British workers’ strikes are also keeping the GBP/USD pressured despite the Bank of England (BOE) officials’ hawkish comments of late.
Amid these plays, Wall Street closed on the positive side but the US 10-year Treasury bond yields print a three-day uptrend to refresh a one-month high of around 3.68%.
Moving on, a light calendar may help the GBP/USD pair to defend the latest rebound. However, the US-China tension, the UK’s labor problems and the State of the Union (SOTU) speech from United States President Joe Biden will be crucial for immediate direction.
Technical analysis
Tuesday’s bullish spinning top candlestick defends GBP/USD buyers unless the quote breaks the 200-DMA support surrounding 1.1950 by the press time.
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