- GBP/USD retreats towards the two-year low marked last week, fades the previous day’s rebound.
- BOE vs. Fed drama keeps the pair pressured, Brexit woes also keep sellers hopeful.
- US dollar stays firmer around 20-year high as yields back bulls ahead of the Fed’s 0.50% rate hike.
- BOE sounds less optimistic due to economic challenges, which in turn can supersede Fed’s normal action, if any, to favor bears.
GBP/USD fails to extend the previous day’s corrective pullback from a two-year low, down 0.15% intraday as sellers attack 1.2550 during early Monday morning in Europe.
The cable pair’s latest weakness could be linked to the US dollar’s strong start to the key week comprising the monetary policy meeting of the Fed, as well as April’s Nonfarm Payrolls (NFP). Also weighing on the quote are the chatters surrounding the Bank of England (BOE) policymakers’ inability to copy the Fed’s tune, due to economic hardships at home.
The US Dollar Index (DXY) reverses the previous day’s pullback from a 20-year high with 0.22% intraday gains around 103.45 as traders rush to the greenback in search of risk-safety during the key week. Also helping the USD are the firmer US Treasury yields and recent fears emanating from Russia and China.
It’s worth noting that the uncertainties surrounding Brexit, the UK’s inability to match NATO spending commitments and doubts over UK PM Boris Johnson’s “right to buy” policy also exert downside pressure on the GBP/USD prices.
Amid these plays, the US stock futures rise half a percent but the US 10-year Treasury yields regain upside momentum, around 2.93% at the latest.
Although week-start buying of the USD recently weighed on the GBP/USD prices, today’s US ISM Manufacturing PMI for April, expected at 58.0 versus 57.1 prior, will be important for intraday directions. However, major attention will be given to Wednesday’s Fed moves and Thursday‘s BOE action.
Also read: GBP/USD Weekly Forecast: In search of a bottom, with eyes on Fed and BOE
Technical analysis
Late 2020 bottom surrounding 1.2675 guards the quote’s immediate rebound. Until then, GBP/USD remains vulnerable to refreshing the multi-day low, currently around 1.2410.
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
GBP/USD stays below 1.2650 as BoE Governor Bailey testifies
GBP/USD trades in the red below 1.2650 on Tuesday. Although BoE Governor Bailey said a gradual approach to removing policy restraint will help them observe risks to the inflation outlook, the sour mood doesn't allow the pair to gain traction.
EUR/USD remains heavy near 1.0550 amid escalating Russia-Ukraine conflict
EUR/USD stays under heavy selling pressure near 1.0550 in Tuesday's European trading. The US Dollar finds fresh haven demand on escalating goeopolitical tensions amid reports that Kremlin is threatening a nuclear response amid Ukraine's use of Western missiles against Russia.
Gold extends recovery toward $2,640 as geopolitical risks intensify
Gold price builds on Monday's gains and rises toward $2,640 as risk-aversion grips markets amid intensifying geopolitical tensions between Russia and Ukraine. Meanwhile, the 10-year US Treasury bond yield is down more than 1% on the day, further supporting XAU/USD.
Canada CPI expected to rise 1.9% in October, bolstering BoC to further ease policy
The Canadian Consumer Price Index is seen ticking higher by 1.9% YoY in October. The Bank of Canada has reduced its policy rate by 125 basis points so far this year. The Canadian Dollar navigates multi-year lows against its American counterpart.
The week ahead: Powell stumps the US stock rally as Bitcoin surges, as we wait Nvidia earnings, UK CPI
The mood music is shifting for the Trump trade. Stocks fell sharply at the end of last week, led by big tech. The S&P 500 was down by more than 2% last week, its weakest performance in 2 months, while the Nasdaq was lower by 3%. The market has now given back half of the post-Trump election win gains.
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.