- GBP/USD continues to lose ground as US Dollar snaps its losing streak.
- Higher US Treasury yields support the Greenback to gain ground.
- Traders await PMI data release from the United Kingdom on Thursday.
GBP/USD continues to remain in the negative territory, trading around 1.2580 during the Asian session on Tuesday. The strength of the US Dollar (USD) could be attributed to the improved US Treasury yields, which in turn, weighs on the GBP/USD pair. Traders are awaiting meeting minutes from the Federal Open Market Committee (FOMC) scheduled for Wednesday.
The US Dollar Index (DXY) edges higher as the market returns from a holiday-extended weekend, snapping its four-day losing streak. The DXY trades higher around 104.40 with 2-year and 10-year yields on US bond coupons standing at 4.65% and 4.30%, respectively, by the press time.
Moreover, ANZ expects that the Federal Reserve (Fed) will initiate rate cuts starting from July 2024. According to the CME FedWatch Tool, there is a 53% possibility of a 25 basis points rate cut by the US Fed in the June meeting. The recent remarks from the Fed officials considering the rate cuts sooner undermined the US Dollar.
San Francisco Federal Reserve President Mary C. Daly mentioned that three rate cuts are a reasonable baseline for 2024. Additionally, St. Louis Federal Reserve (Fed) president, James Bullard suggested Federal Reserve consider lowering interest rates at its March meeting.
The Bank of England (BoE) is expected to maintain interest rates at their current level to address persistent consumer prices in the United Kingdom (UK). Strong consumer spending adds complexity for policymakers at the Bank of England (BoE) as they navigate a technical recession and higher inflation amidst elevated interest rates.
Traders are likely to closely monitor the upcoming S&P Global/CIPS Purchasing Managers Index (PMI) data on Thursday to gain further insights into the UK's economic landscape. The Services PMI is anticipated to show a slight moderation in February but is expected to remain above the 50 mark, indicating expansion. Meanwhile, the Manufacturing sector could demonstrate a slight improvement.
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 in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.