- GBP/USD continues to find some support and attracts some buyers near the 200-day SMA.
- A modest USD pullback from a multi-week high is seen as a key factor acting as a tailwind.
- Hawkish Fed expectations should help limit the USD losses and cap the upside for the pair.
The GBP/USD pair defends a technically significant 200-day Simple Moving Average (SMA) on Monday and attracts some buyers in the vicinity of the monthly low. Spot prices stick to intraday gains, around the 1.1965-1.1975 region through the early part of the European session and for now, seem to have snapped a three-day losing streak.
A modest US Dollar pullback from a seven-week high turns out to be a key factor providing a lift to the GBP/USD pair. The USD downtick, meanwhile, could be attributed to some profit-taking amid a softer tone surrounding the US Treasury bond yields and a recovery in the US equity futures. Any meaningful slide for the Greenback, however, seems elusive, warranting some caution before positioning for a further appreciating move for the major.
The prospects for further policy tightening by the Fed should act as a tailwind for the US bond yields and lend support to the USD. In fact, the markets seem convinced that the US central bank will stick to its hawkish stance for longer in the wake of stubbornly high inflation. The bets were reaffirmed by the stronger US PCE Price Index data released on Friday, which indicated that inflation isn't coming down quite as fast as hoped.
Moreover, the recent upbeat US macro data point to an economy that remains resilient despite rising borrowing costs and should allow the Fed to continue raising interest rates. Investors, meanwhile, remain worried about economic headwinds stemming from rapidly rising borrowing costs. This, along with geopolitical tensions, should limit losses for the safe-haven buck and keep a lid on the GBP/USD pair, at least for the time being.
In the absence of any relevant data from the UK, traders look to the US economic docket - featuring the release of Durable Goods Orders and Pending Home Sales data. This, along with the US bond yields and the broader risk sentiment, will influence the USD and provide some impetus to the GBP/USD pair. The aforementioned fundamental backdrop, meanwhile, suggests that the pair's intraday move-up could be seen as a selling opportunity.
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
EUR/USD clings to daily gains near 1.0300 after US PMI data
EUR/USD trades in positive territory at around 1.0300 on Friday. The pair breathes a sigh of relief as the US Dollar rally stalls, even as markets stay cautious amid geopolitical risks and Trump's tariff plans. US ISM PMI improved to 49.3 in December, beating expectations.
GBP/USD holds around 1.2400 as the mood improves
GBP/USD preserves its recovery momentum and trades around 1.2400 in the American session on Friday. A broad pullback in the US Dollar allows the pair to find some respite after losing over 1% on Thursday. A better mood limits US Dollar gains.
Gold retreats below $2,650 in quiet end to the week
Gold shed some ground on Friday after rising more than 1% on Thursday. The benchmark 10-year US Treasury bond yield trimmed pre-opening losses and stands at around 4.57%, undermining demand for the bright metal. Market players await next week's first-tier data.
Stellar bulls aim for double-digit rally ahead
Stellar extends its gains, trading above $0.45 on Friday after rallying more than 32% this week. On-chain data indicates further rally as XLM’s Open Interest and Total Value Locked rise. Additionally, the technical outlook suggests a rally continuation projection of further 40% gains.
Week ahead – US NFP to test the markets, Eurozone CPI data also in focus
King Dollar flexes its muscles ahead of Friday’s NFP. Eurozone flash CPI numbers awaited as euro bleeds. Canada’s jobs data to impact bets of a January BoC cut. Australia’s CPI and Japan’s wages also on tap.
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.