- GBP/USD drifts lower for the second straight day and drops to over a one-week trough.
- The USD sticks to the hotter US PPI-inspired gains and exerts some pressure on the pair.
- Traders now look to the US macro data for some impetus ahead of the FOMC next week.
The GBP/USD pair continues losing ground for the second straight day – also marking the fourth day of a negative move in the previous five – and drops to over a one-week low during the Asian session on Friday. Spot prices currently trade around the 1.2735 region and seem vulnerable to slide further amid some follow-through US Dollar (USD) buying.
The hotter-than-expected US Producer Price Index (PPI) pointed to still-sticky inflation and cooled market expectations for early interest rate cuts by the Federal Reserve (Fed). This, in turn, led to the overnight rise in the US Treasury bond yields, which, along with a generally weaker tone surrounding the equity markets, is seen underpinning the safe-haven Greenback and exerting some downward pressure on the GBP/USD pair.
Meanwhile, the current market pricing indicates a greater chance that the US central bank will begin cutting interest rates at the June policy meeting. This is reinforced by a fresh leg down in the US Treasury bond yields, which might hold back the USD bulls from placing aggressive bets. Apart from this, expectations that the Bank of England (BoE) will keep interest rates higher for longer should limit losses for the GBP/USD pair.
Traders might also prefer to wait for more cues about the Fed's rate-cut path before positioning for the next leg of a directional move for the USD. Hence, the focus will remain on the two-day FOMC meeting starting next Tuesday. In the meantime, Friday's release of the Empire State Manufacturing Index, Industrial Production and the Prelim Michigan Consumer Sentiment Index might provide some impetus to the GBP/USD pair.
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 holds on to intraday gains after upbeat US data
EUR/USD remains in positive ground on Friday, as profit-taking hit the US Dollar ahead of the weekend. Still, Powell's hawkish shift and upbeat United States data keeps the Greenback on the bullish path.
GBP/USD pressured near weekly lows
GBP/USD failed to retain UK data-inspired gains and trades near its weekly low of 1.2629 heading into the weekend. The US Dollar resumes its advance after correcting extreme overbought conditions against major rivals.
Gold stabilizes after bouncing off 100-day moving average
Gold trades little changed on Friday, holding steady in the $2,560s after making a slight recovery from the two-month lows reached on the previous day. A stronger US Dollar continues to put pressure on Gold since it is mainly priced and traded in the US currency.
Bitcoin to 100k or pullback to 78k?
Bitcoin and Ethereum showed a modest recovery on Friday following Thursday's downturn, yet momentum indicators suggest continuing the decline as signs of bull exhaustion emerge. Ripple is approaching a key resistance level, with a potential rejection likely leading to a decline ahead.
Week ahead: Preliminary November PMIs to catch the market’s attention
With the dust from the US elections slowly settling down, the week is about to reach its end and we have a look at what next week’s calendar has in store for the markets. On the monetary front, a number of policymakers from various central banks are scheduled to speak.
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.