- GBP/USD printed a new two-day low around 1.2323, though stabilized around 1.2370s, but stayed negative in the day.
- Money market futures expect the Bank of England would hike 50 bps at its next meeting.
- US economic docket would be busy, though, featuring GDP, unemployment claims, and the Fed’s preferred inflation gauge.
The Pound Sterling (GBP) is retreating after hitting a seven-month high at 1.2447, though it lacked the strength to hold to the 1.2400 figure and is meandering in the 1.2380s area. At the time of writing, the GBP/USD exchanges hands at 1.2375, below its opening price by a minimal margin.
US Dollar climbs underpinned by high US Treasury yields
Sentiment remains upbeat, as shown by Wall Street’s trading in the green. Factors like a steady US Dollar and US Treasury bond yields holding to its gains weigh the GBP/USD pair. The lack of US and UK economic data keeps investors leaning on last week’s news and expectations for interest rate hikes.
Last week’s UK’s Consumer Price Index (CPI) report, with inflation staying at 10.5% though eased from 10.7% of its last month’s previous reading. That increased the likelihood of a 50 bps rate hike by the Bank of England (BoE), which according to Reuters, stand at a 70% chance, while a 25 bps rate lift is fully priced in.
In the meantime, National Grid has asked some UK households to cut energy use today and is likely to extend that request to tomorrow due to a drop in wind power coupled with freezing temperatures across the nation.
On the US front, Fed officials entered its blackout period so that traders would lean on the current week’s economic calendar. The US docket will feature Gross Domestic Product (GDP) results for Q4 with around 2.6% QoQ estimates. Also, Flash PMIs, Unemployment Claims, Durable Good Orders, and the Fed’s favorite gauge for inflation, Personal Consumption Expenditures (PCE), would provide fresh impetus to Gold traders.
GBP/USD Key Technical Levels
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 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.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
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.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
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.