- GBP/USD puts efforts to retrace its recent losses despite market caution.
- The US Dollar retreats on the decline in US Treasury yields.
- A slew of UK data is set to be released on Tuesday including CPI, PPI, and Retail Price Index.
GBP/USD appears to reverse its decline initiated on Thursday, hovering around 1.2730 during the Asian session on Monday. However, the pair faced setbacks amidst market caution preceding the US Federal Reserve's interest rate decision on Wednesday.
The US Dollar Index (DXY) experienced a surge in momentum, buoyed by the rise in US Treasury yields on Friday. This uptick in yields was fueled by a hawkish sentiment surrounding the Federal Reserve, which was anticipated to maintain its heightened interest rates amidst recent inflationary pressures. However, a subsequent retreat in US yields exerted pressure on the US Dollar (USD), at the time of writing.
According to the CME FedWatch Tool, the probability of a rate cut in March presently stands at 1.0%, while it has diminished to 6.1% for May. The likelihood of a rate cut in June and July is lower, at 56.3% and 75.2%, respectively.
On Friday, the preliminary US Michigan Consumer Sentiment Index for March dipped to 76.5, from the previous reading of 76.9. This decline contrasts with expectations for it to remain steady. Meanwhile, Industrial Production (MoM) edged up by 0.1% in February, surpassing the anticipated flat reading of 0.0% and recovering from the previous month's decline of 0.5%.
On the other side, Consumer Inflation Expectations, as released by the Bank of England (BoE) on Friday, rose by 3.0%, showing a decrease from the previous uptick of 3.3%. This data prompted markets to increase their wagers on a Bank of England (BoE) rate cut in June, potentially weakening the Pound Sterling (GBP) and consequently pressuring the GBP/USD pair downward.
On Monday, the Rightmove House Price Index (MoM) for March surged by 1.5%, surpassing the previous rise of 0.9%. Additionally, the annual index saw an increase of 0.8% compared to the previous 0.1%. Looking ahead to Tuesday, traders are expected to closely monitor several market indicators from the United Kingdom (UK), including the Consumer Price Index, Producer Price Index, and Retail Price Index.
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 1.0550 after mixed US data
EUR/USD stays under modest bearish pressure and trades below 1.0550 in the American session. Although the US Dollar struggles to gather strength following mixed macroeconomic data releases, the risk-averse market environment doesn't allow the pair to gain traction.
GBP/USD recovers modestly, trades near 1.2650
GBP/USD stabilizes near 1.2650 after falling toward 1.2600 earlier in the day. Nevertheless, the pair struggles to gather bullish momentum as the deepening Russia-Ukraine conflict causes investors to stay away from risk-sensitive assets.
Gold extends gains beyond $2,660 amid rising geopolitical risks
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.