GBP/USD: Bulls in a wait-and-see mode ahead of BOE’s inflation hearings
|- USD demand & BOE Ramsden comments cap the upside.
- Brexit optimism underpins.
- Eyes on BOE’s inflation report hearings.
The overnight rebound in the GBP/USD pair lost legs just shy of 1.3250 mark, with the bears now push the rate back towards the NY lows of 1.3224 amid resurgent USD demand and North Korea headlines.
GBP/USD:
Over the last hours, the spot is trying hard to defend the bids, as the sentiment soured around the risk currency GBP on the back of renewed political jitters over North Korea after Japan backed the US President Trump’s move to designate North Korea as a state sponsor of terrorism.
Moreover, the overnight comments from the BOE policymaker Ramsden continue to remain a weight on the pound, especially his downbeat comments on the economic outlook and Brexit process.
Furthermore, a fresh bout of buying interest seen around the US dollar against its main competitors in Asia, despite subdued Treasury yields, also collaborated to the renowned weakness seen in Cable.
However, the downside is expected to remain cushioned on the back of the Brexit optimism, after the latest reports suggested that the UK is preparing to increase its offer for the so-called EU divorce bill. Meanwhile, further recovery could also remain limited, as investors await the BOE’s inflation report hearings scheduled later today.
The inflation report hearings could provide an important insight into the BOE’s outlook on inflation. Any expectations of cooling price pressures against a backdrop of slowing investment and growth would almost pour cold water on future rate hike expectations.
Meanwhile, all eyes also remain on the UK’s fiscal budget, which will be announced by the UK Finance Minister Hammond on Wednesday. UK Budget: Only a fiscal miracle could boost the Pound
GBP/USD Technical View
Karen Jones, Analyst at Commerzbank notes: “We remain unable to rule out a move to 1.3338/43. While it holds here, our attention remains on the 1.3076 2016-2017 uptrends. The 1.3076 level represents the breakdown point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement."
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