- GBP/USD is marching towards 1.2600 as a Fed rate-cycle pause would trim Fed-BoE policy divergence.
- US labor market conditions carry the potential of making inflation persistent.
- S&P500 futures are showing further losses in early Asia, indicating a risk-off mood.
The GBP/USD pair is approaching the round-level resistance of 1.2600 in the early Tokyo session. The Cable is aiming higher as the Federal Reserve (Fed) is following the language of other central banks. Fed chair Jerome Powell has confirmed that further monetary policy decisions will be data-dependent, which indicates that the central bank has reached an intermediate terminal rate for now.
S&P500 futures are showing further losses in early Asia after a bearish settlement. US equities surrendered their entire gains added in the early New York session amid uncertainty over the further path to be followed by the Fed to tame sticky inflation. Negative market sentiment has faded appeal for risk-sensitive assets.
The US Dollar Index (DXY) is declining towards May 03 low around 101.07 amid neutral guidance from the Fed. Also, the US yields are heavily down amid an increase in demand for US government bonds. The 10-year US Treasury yields have dropped to near 3.36%.
Meanwhile, upbeat US labor market conditions are signaling that a hawkish stance from the Fed would not be over soon as labor shortage could propel inflationary pressures. On Wednesday, the US Automatic Data Processing (ADP) agency reported an addition of fresh 296K jobs in April vs. the estimates of 150K and the former release of 145K.
There is no denying the fact that extreme labor shortage would have been offset by offering higher wages, which carries the potential of making inflation persistent.
On the Pound Sterling front, the Bank of England (BoE) is expected to raise interest rates further as United Kingdom inflation is not ready to leave the double-digit territory despite consistent policy tightening. BoE Governor Andrew Bailey is ready to raise interest rates consecutively for the 12th time. An interest rate hike of 25 bps is anticipated by the market participants.
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.