fxs_header_sponsor_anchor

News

GBP/USD pressured by late US Dollar comeback and central bank divergence themes

  • GBP/USD losing ground as a comeback in the greenback kicks in. 
  • Eyes turn to the Fed's chairman Powell and US NFP.

GBP/USD is down some 0.2% on the day as we head toward the Wall Street close with the price traveling between 1.1992 and 1.2048. Despite a soft US Dollar at the start of the day as investors awaited testimony by Federal Reserve Chair Jerome Powell and Nonfarm Payrolls, GBP stayed pressured as central bank divergences play out.  

The Federal Reserve may keep raising interest rates into June while the Bank of England could soon pause policy tightening while the BOE may only have 25bp more of tightening left to do. Key survey data suggest tightness in the UK labour market is abating and the Gross Domestic Product is up next for review.

Analysts at TD Securities argued that it is set to bounce back sharply as many of the special factors that weighed on the December data will reverse. ''A downtick in strike action, a jump in hospital visits, the resumption of the Premier League after the end of the World Cup, and a bounce-back in school attendance likely drove a 0.7% m/m increase in services output. Underlying growth dynamics likely remained weak though,'' the analysts argued. 

Meanwhile, Federal Reserve chairman Jerome Powell’s testimony before Congress on Tuesday and Wednesday will be a driver for the US Dollar as will the jobs report. The analysts at Danske Bank are expecting growth to moderate to 220k after the effects of warm weather and heavy seasonal adjustments in January faded. ''Overall, leading indicators suggest that labor market conditions have remained tight amid a recovering growth outlook. The FOMC blackout period will begin on Saturday 11th of March, so Fed still has the option to guide the markets after the Jobs Report.''

Meanwhile, Fed funds futures traders are pricing in a 76% probability the Fed will raise rates by 25 basis points at its March 21-22 meeting, and a 24% likelihood of a 50 basis points increase. 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.