- GBP/USD has rebounded about 1.0% into the upper 1.2500s amid pre-month-end selling pressure in the US dollar.
- Focus now turns to next week’s Fed and BoE meetings, which could pose downside risks to the pair.
- GBP/USD rallies, for now, may remain vulnerable to being sold.
Pre-month-end profit-taking in the US dollar, which has up until this point been on a rampage higher in recent weeks against most of its major counterparts, is being attributed as the main factor giving GBP/USD a lift on Friday. The pair was last trading in the 1.2575 region, up about 1.0% on the day and over 1.3% higher versus Thursday’s intra-day lows at 1.2410.
But the pair’s latest rebound comes as little consolation for the deflated GBP/USD bulls, with cable still set to end the week with losses of about 2.0% and the month with losses of about 4.25%. That would mark GBP/USD’s joint-worst one-month performance since July 2019.
Upcoming US Core PCE inflation data for March at 1330BST will be of interest and is likely to reaffirm the scale of the inflation problem currently plaguing the US economy. Focus then turns to next week’s Fed and BoE meetings which, a cursory examination of which would seem to imply downside risks for GBP/USD.
After all, the Fed seems increasingly tilting towards the need to take rates above so-called neutral to control inflation, which the BoE has been coming across as more concerns about weak UK growth as of late, seemingly weakening their resolve to tighten. As a result, any further GBP/USD rebound might well be viewed as a good opportunity to sell. Resistance in the 1.2675 area looks may attract particular attention from the bears.
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