GBP/USD hits YTD high amid USD weakness, cautiously eyes 1.3000 amid BoE speculations


  • GBP/USD bounces to a new YTD high as US Treasury bond yields tumble amid mixed US jobs report.
  • Despite talks of further rate hikes by Fed officials, the USD falters; GBP/USD traders now eye the BoE stance.
  • GBP/USD challenges 1.2850/1.2900 resistance, with a potential downturn to 1.2800 if this area remains unconquered.

GBP/USD climbs to a new year-to-date (YTD) high at 1.2867, amid overall US Dollar (USD) weakness, after the major printed a daily low of 1.2750. The GBP/USD exchanges hands at 1.2864, gains 0.21%, helped by falling US Treasury bond yields, even though US Federal Reserve (Fed) speakers suggested further rate hikes needed.

GBP/USD propelled by plummeting US bond yields; future hinges on BoE’s potential aggressive tightening

Of late, Wall Street showed an improvement in market sentiment as US Treasury bond yields tumble. Last Friday’s jobs report in the United States (US) was mixed. Although the headline jobs report showed that Nonfarm Payrolls for June added 209K jobs above forecasts, other employment figures still portray a tight labor market. Average Hourly Earnings (AHE) jumped 0.2% to 4.4% YoY compared to May, while the Unemployment Rate at 3.6% YoY flashed that hiring improved.

That said, money market futures had priced in a 92.4% chance for a 25 basis points (bps) rate hike by the Fed at the 25-26 July meeting, as shown by the CME FedWatch Tool.

Despite that, the greenback is plunging, dragged by the fall of US bond yields, with the 10-year benchmark rate losing six bps, down to 4.008%. The US Dollar Index (DXY), a measure of the buck’s performance vs. a basket of six currencies, slumps 0.30% and sits at 101.963, at four-week lows.

In the meantime, the central bank bonanza continued ahead of the Fed’s blackout period to begin on Friday. The Fed’s Vice-Chair for Supervision, Michael Barr, stated the Fed still has “a bit of work to do” on rates. At the same time, Cleveland Fed President Loretta Mester commented that the economy is still robust while saying, “When the economy reopened, labor demand well outpaced labor supply, putting upward pressure on wages and price inflation.” She stated, “More hikes are needed to bring inflation back down to target.”

Recently, the San Francisco Fed Preside Mary Daly said that a couple of rate hikes are needed and that inflation risks outpaced growth ones, diminishing the chances of overtightening. On the dovish front, Atlanta’s Fed President Raphael Bostic has emerged as the new dove in town, saying that inflation could return to the Fed’s 2% target without further rate increases.

On the UK front, the Bank of England (BoE) Governor Andrew Bailey stated the central bank needs to see the labor market cooling down as the BoE struggles to tackle stickier inflation levels in the UK economy. BoE expectations for further tightening on Monday see the Bank Rate peaking between the 6.25%-6.50% range in early 2024, the highest level in 25 years.

The upcoming UK jobs report on July 11 is likely to see the unemployment rate stand at 3.8%, while Average Earnings are estimated to rise close to 7%, a sign that would increase the odds for aggressive tightening by the BoE. Even though it should be viewed as positive for Sterling (GBP), increased chances of a recession could boost the appetite for the greenback. Therefore, further GBP/USD downside could be expected in the medium term.

GBP/USD Price Analysis: Technical outlook

GBP/USD Daily chart

The GBP/USD remains neutral to upward biased, but price action suggests the 1.2850/1.2900 barrier is proving to be strong resistance to surpass. GBP/USD buyers must reclaim that area, so they could threaten to break the 1.3000 figure. Otherwise, if GBP/USD struggles again at current exchange rates, the GBP/USD could dive past 1.2800 and edge toward the 20-day Exponential Moving Average (EMA)  at 1.2702. Once cleared, the next support emerges at the confluence of the June 29 swing low and the 50-day EMA, both at around the 1.2590/95 area.

GBP/USD

Overview
Today last price 1.2864
Today Daily Change 0.0025
Today Daily Change % 0.19
Today daily open 1.2839
 
Trends
Daily SMA20 1.2714
Daily SMA50 1.2574
Daily SMA100 1.2412
Daily SMA200 1.2158
 
Levels
Previous Daily High 1.285
Previous Daily Low 1.2726
Previous Weekly High 1.285
Previous Weekly Low 1.2659
Previous Monthly High 1.2848
Previous Monthly Low 1.2369
Daily Fibonacci 38.2% 1.2802
Daily Fibonacci 61.8% 1.2773
Daily Pivot Point S1 1.276
Daily Pivot Point S2 1.2681
Daily Pivot Point S3 1.2637
Daily Pivot Point R1 1.2884
Daily Pivot Point R2 1.2928
Daily Pivot Point R3 1.3007

 

 

Share: Feed news

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


Recommended content

Editors’ Picks

Pound Sterling edges higher after BoE rate cut, focus shifts to Governor Bailey – LIVE

Pound Sterling edges higher after BoE rate cut, focus shifts to Governor Bailey – LIVE

The Bank of England (BoE) lowered the policy rate by 25 basis points to 4.75% following the November meeting, as expected, and said that the budget is forecast to boost inflation. BoE Governor Bailey will speak on the policy outlook in a press conference next.

FOLLOW US LIVE
EUR/USD clings to gains above 1.0750 amid US Dollar pullback

EUR/USD clings to gains above 1.0750 amid US Dollar pullback

EUR/USD holds higher ground and trades above 1.0750 on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trump win-inspired USD longs ahead of the Federal Reserve's highly-anticipated policy announcements.

EUR/USD News
Gold recovers above $2,660, awaits Fed rate decision

Gold recovers above $2,660, awaits Fed rate decision

Gold recovers slightly following Wednesday's sharp decline and trades above $2,660. The benchmark 10-year US Treasury bond yield struggles to push higher after Trump-inspired upsurge, allowing XAU/USD to hold its ground ahead of the Fed policy decisions.

Gold News
Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory

Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory

The Federal Reserve is widely expected to lower the policy rate after Donald Trump won the US presidential election. Fed Chairman Powell’s remarks could provide important clues about the rate outlook.

Read more
Outlook for the markets under Trump 2.0

Outlook for the markets under Trump 2.0

On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.

Read more
Best Forex Brokers with Low Spreads

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.

Read More

Forex MAJORS

Cryptocurrencies

Signatures