- 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.
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
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.