- GBP/USD turned south on Thursday and erased all the weekly gains.
- The pair could gather recovery momentum in case 1.2200 support holds.
- Markets will pay close attention to action in US stock and bond markets later in the day.
GBP/USD lost more than 100 pips on Thursday and erased all the gains it recorded in the first half of the week. Early Friday, the pair staged a rebound and stabilized above 1.2200.
US Treasury bond yields surged higher on Thursday after the September inflation report and helped the US Dollar (USD) outperform its rivals.
Although the US Bureau of Labor Statistics announced that the annual Core Consumer Price Index (CPI) inflation, which excludes volatile food and energy prices, edged lower to 4.1% from 4.3% as forecast in September, underlying details of the report revived expectations for one more Federal Reserve rate increase later in the year. The so-called 'supercore inflation' increased 0.6% on a monthly basis, highlighting a lack of progress in the sticky part of inflation.
Pound Sterling price this week
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies this week. Pound Sterling was the weakest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.12% | 0.09% | 0.04% | 0.67% | 0.34% | 0.86% | -0.28% | |
| EUR | -0.14% | -0.04% | -0.08% | 0.53% | 0.21% | 0.75% | -0.40% | |
| GBP | -0.09% | 0.05% | -0.03% | 0.56% | 0.26% | 0.77% | -0.34% | |
| CAD | -0.04% | 0.08% | 0.04% | 0.63% | 0.29% | 0.82% | -0.31% | |
| AUD | -0.68% | -0.52% | -0.57% | -0.60% | -0.31% | 0.22% | -0.90% | |
| JPY | -0.34% | -0.21% | -0.24% | -0.28% | 0.28% | 0.49% | -0.60% | |
| NZD | -0.85% | -0.73% | -0.78% | -0.81% | -0.21% | -0.52% | -1.14% | |
| CHF | 0.25% | 0.38% | 0.33% | 0.30% | 0.89% | 0.58% | 1.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Early Friday, the 10-year US T-bond yield corrects lower after rising more than 3% on Thursday and makes it difficult for the USD to build on recent gains. Meanwhile, US stock index futures trade modestly higher.
If US yields continue to push lower in the second half of the day, the USD could stay on the back foot and allow GBP/USD to stretch higher ahead of the weekend. On the flip side, a cautious opening in Wall Street alongside recovering US yields could weigh on the pair.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart declined to 40, pointing to a bearish tilt in the short term. 1.2200 (psychological level, static level, 100-period Simple Moving Average (SMA), 50-period SMA) aligns as a key pivot point for the pair.
Once 1.2200 is confirmed as support, GBP/USD could extend its recovery toward 1.2250 (20-period SMA) and 1.2300 (Fibonacci 23.6% retracement of the latest downtrend).
If GBP/USD fails to hold above 1.2200, sellers could show interest. On the downside, interim support seems to have formed at 1.2170 (static level) before 1.2130 (static level) and 1.2100 (psychological level, static level).
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
GBP/USD hovers around 1.2750 on UK election day
GBP/USD is trading on the front foot near 1.2750 in early European session on Thursday. A broadly softer US Dollar keeps the pair afloat but traders refrain from placing fresh bets on the Pound Sterling, as UK voters head for polls.
EUR/USD holds below 1.0800 ahead of ECB Accounts
EUR/USD keeps its range below 1.0800 in the European morning on Thursday. This upside is attributed to a decline in the US Dollar due to the escalated speculations of a September Fed rate cut. ECB Accounts is next in focus.
Gold looks north amid light trading, focus shifts to US NFP
Gold price is looking to extend the previous upsurge early Thursday, sitting at the highest level in over a week near $2,360. Sustained US Dollar weakness alongside sluggish US Treasury bond yields underpin Gold price amid the July 4 US holiday-thinned market conditions.
Binance coin poised for an 11% crash
Binance Coin breached its ascending trendline support on Wednesday and declines 3% on Thursday. On-chain analysis reveals a long-to-short ratio below one, indicating bearish sentiment and suggesting a potential price downturn for BNB in the days ahead.
Global strategy 3Q 2024
The latest economic and inflation data support a normalisation of monetary policy. The ECB started by cutting interest rates for the first time in June, while the US Fed is still waiting.