- GBP/USD attracts some buyers on Wednesday, albeit lacks follow-through.
- Subdued USD demand acts as a tailwind ahead of the crucial US CPI report.
- Bets that the BoE is nearing the end of its rate-hiking cycle cap further gains.
The GBP/USD pair edges higher during the Asian session on Wednesday, albeit lacks follow-through and remains confined in a familiar range held over the past week or so. Spot prices currently trade around the 1.2500 psychological mark and remain well within the striking distance of a three-month low touched last Thursday.
The US Dollar (USD) languishes near the weekly low and turns out to be a key factor acting as a tailwind for the GBP/USD pair, though expectations that the Bank of England (BoE) is nearing the end of its rate-hiking cycle cap the upside. BoE Governor Andrew Bailey told lawmakers last week that the central bank is much nearer to ending its run of rate increases. Furthermore, the UK employment details released on Tuesday pointed to a cooling labour market and do not justify another rate hike after the widely anticipated lift-off in September.
The Federal Reserve (Fed), on the other hand, is expected to pause at its policy meeting next week. The markets, however, are still pricing in the possibility of one more 25 bps rate hike by the end of this year. The bets were reaffirmed by the upbeat US macro data released last week, which pointed to a resilient economy. Moreover, the fact that inflation is not cooling fast enough should allow the Fed to keep rates higher for longer. Hence, the focus remains on the US CPI report, due later today, which will provide fresh cues about the Fed's future rate hike path.
In the meantime, the prospects for further policy tightening by the US central bank remain supportive of elevated US Treasury bond yields. This, along with the prevalent cautious market mood, should act as a tailwind for the safe-haven Greenback and contribute to keeping a lid on any meaningful appreciating move for the GBP/USD pair. Traders now look to the UK macro data dump, including the monthly GDP report, to grab short-term opportunities during the European session. The fundamental backdrop, meanwhile, warrants some caution for bulls.
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 remains in the red below 0.6500 on US-China trade risks
AUD/USD remains under selling pressure below 0.6500 in the Asian session on Tuesday, reversing some losses. Trump's threatened additional 10% tariffs on China, weighinmg heavily on risk sentiment and the China-proxy Australian Dollar while lifting the haven demand for the US Dollar.
USD/JPY ranges around 154.00 as US Dollar strength offsets risk aversion
USD/JPY remains confined in a familiar range at around 154.00 in Tuesday's Asian trading. Fresh tensions surrounding US-China trade war underpin the safe-haven US Dollar, limiting the risk-off sentiment-driven gains in the Japanese Yen. Fed Minutes are next in focus.
Gold: Trump tariffs threat lifts XAU/USD, focus shifts to Fed Minutes
Gold price has staged a solid comeback so far this Tuesday’s trading after hitting a six-day low at $2,605 in early dealings. Gold buyers look forward to the Minutes of the US Federal Reserve’s (Fed) November meeting for the next push higher.
TRON Foundation becomes the largest investor in Donald Trump's World Liberty Financial
Donald Trump-backed DeFi platform, World Liberty Financial, received new support on Monday after Tron founder Justin Sun announced that the Tron Foundation had invested $30 million into the president-elect's platform, making them its largest financial supporter.
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.