• GBP/USD slides after Senior Loan Officer Opinion Survey report shows US banks expecting tightening credit conditions.
  • US Treasury bond yields continue to gain ground, undermining GBP/USD.
  • The debt ceiling debate in Washington could trigger outflows towards safe-haven peers; future inflation data may benefit US Dollar.

The GBP/USD retreats after hitting a new year-to-date (YTD) high of 1.2668 after the US Federal Reserve (Fed) reported the Senior Loan Officer Opinion Survey (SLOOS), which showed that US banks are expecting tightening credit conditions. However, a looming Bank of England (BoE) monetary policy cushioned the Pound Sterling (GBP). At the time of writing, the GBP/USD is trading at 1.2618.

US banks expecting tightening credit conditions weighed on the GBP/USD

Wall Street’s wavered after the SLOOS report, which showed that credit conditions are tightening, and businesses’ demand for loans is weakening. Banks expect to strain standards across all loan categories on expected deterioration in credit quality, reduced risk tolerance, and concerns about funding costs, liquidity, and deposit outflows.

The GBP/USD slid after the report crossed the screens, from around 1.2640 to current exchange rates, as the greenback recovered some ground. The US Dollar Index (DXY), which tracks the performance of six currencies vs. the American Dollar (USD), rises 0.15%, at 101.370.

Meanwhile, US Treasury bond yields continued to gain ground, with the 10-year benchmark note rate at 3.520%, up seven and a half bps, undermining the GBP/USD.

Aside from this, Federal Reserve officials had begun to cross newswires, with Aaron Goolsbee from the Chicago’s Fed crossing the wires. He said the Fed would be data dependent, and that is too soon to judge rate decisions for the June meeting.

Discussions in Washington could shift market sentiment as the debt ceiling debate between the White House and the US Congress could trigger outflows toward safe-haven peers, like the Japanese Yen (JPY), the Swiss Franc (CHF), and Gold.

According to Janet Yellen, the US Treasury Secretary, there are no accessible alternatives to resolve the debt limit issue in Washington without assistance from the US Congress. In the meantime, US President Joe Biden is expected to meet lawmakers on May 9 to advance in negotiations regarding raising the ceiling.

The US economic docket will feature inflation data in the upcoming days. Any significant consumer or producer data jump could benefit the US Dollar; hence, the GBP/USD could continue to trend lower, with the pair expected to fall below 1.2600.

Earlier, the US Commerce Department revealed that Wholesale Inventories were unchanged in March, below estimates of 0.1% MoM. Annually based, inventories jumped 9.1% in March, despite the first quarter decline, as more robust US consumer spending contributed to the inventory rundown.

GBP/USD Key Technical Levels

GBP/USD

Overview
Today last price 1.2617
Today Daily Change -0.0015
Today Daily Change % -0.12
Today daily open 1.2632
 
Trends
Daily SMA20 1.2476
Daily SMA50 1.2302
Daily SMA100 1.2225
Daily SMA200 1.195
 
Levels
Previous Daily High 1.2652
Previous Daily Low 1.2561
Previous Weekly High 1.2652
Previous Weekly Low 1.2436
Previous Monthly High 1.2584
Previous Monthly Low 1.2275
Daily Fibonacci 38.2% 1.2618
Daily Fibonacci 61.8% 1.2596
Daily Pivot Point S1 1.2578
Daily Pivot Point S2 1.2524
Daily Pivot Point S3 1.2486
Daily Pivot Point R1 1.2669
Daily Pivot Point R2 1.2706
Daily Pivot Point R3 1.276

 

 

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