- GBP/USD struggles to gain any meaningful traction and remains confined in a range.
- A bleak UK economic outlook and bets for a BoE rate cut in 2024 weigh on the GBP.
- A subdued USD demand acts as a tailwind ahead of BoE’s Bailey and Fed’s Powell.
The GBP/USD pair lacks any firm intraday direction on Wednesday and oscillates in a narrow band below the 1.2300 mark during the Asian session. Spot prices, meanwhile, hold above the weekly low touched on Tuesday and for now, seem to have stalled this week's rejection slide from the 200-day Simple Moving Average (SMA), around the 1.2425-1.2430 area, or the highest level since mid-September.
Traders seem reluctant to place aggressive bets and opt to remain on the sidelines ahead of scheduled speeches by the Bank of England (BoE) Governor Andrew Bailey and Federal Reserve (Fed) Chair Jerome Powell. Given that the risk of the UK economy entering a recession is high, Bailey's remarks will be looked upon to reaffirm bets for a rate cut in August 2024. In fact, the BoE's Chief Economist Huw Pill said on Monday that the central bank might wait until the middle of next year before cutting interest rates from their current 15-year high. This might continue to weigh on the British Pound (GBP) and favours the GBP/USD bears.
Investors, meanwhile, will closely scrutinize Powell's comments for cues about the future rate-hike path, which will play a key role in influencing the near-term USD price dynamics. The US central bank last week noted that financial conditions may be tight enough already to control inflation. The markets took this as a sign that the Fed was done with its policy-tightening campaign. Adding to this, the softer US jobs report released on Friday reaffirmed the view that the Fed will maintain the status quo for the third straight time in December and triggered a sharp US Dollar (USD) retracement slide from the vicinity of the YTD peak.
That said, a slew of influential FOMC members stuck a hawkish tone this week and kept alive hopes for additional rate hikes. This led to a goodish USD recovery from a multi-week low touched on Monday. However, a further decline in the US Treasury bond yields and the prevalent risk-on mood fails to assist the safe-haven buck to build on its gains registered over the past two days. This, in turn, is seen as the only factor lending some support to the GBP/USD pair. The aforementioned fundamental backdrop, meanwhile, favours bearish traders and suggests that the path of least resistance for spot prices remains to the downside.
Technical levels to watch
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
AUD/USD gathers strength to near 0.6550 on weaker US Dollar
The AUD/USD pair attracts some buyers to near 0.6540 during the early Asian session on Monday. The US Dollar Index (DXY) declines slightly after reaching a new two-year high despite the strong US S&P Purchasing Managers Index (PMI) data.
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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.