- GBP/USD continues losing round for the third straight day and slides below the 200-day SMA.
- Expectations that the BoE’s rate-hiking cycle is nearing the end continue to weigh on the GBP.
- Bets for additional rate hikes by the Fed boost the USD and contribute to the ongoing decline.
The GBP/USD pair remains under heavy selling pressure for the third straight day on Friday and drops to its lowest level since January 6 during the first half of the European session.
The pair currently trades around the 1.1930-1.1925 region, just below the very important 200-day SMA, and seems vulnerable to decline further.
The British Pound continues to be weighed down by expectations that the Bank of England's (BoE) current policy-tightening cycle might be nearing the end.
The speculations were fueled by softer-than-expected UK consumer inflation figures released on Tuesday, which seem to have eased pressure on the UK central bank to deliver aggressive rate hikes going forward. This, along with strong follow-through US Dollar buying, is seen dragging the GBP/USD pair lower on the last day of the week.
Growing acceptance that the Federal Reserve will stick to its hawkish stance in the wake of stubbornly high inflation lifts the USD to a fresh six-week high. In fact, the markets are now pricing in at least a 25 bps lift-off at each of the next two FOMC policy meetings in March and May. This, in turn, pushes the yield on the benchmark 10-year US government bond to the highest level since late December. Apart from this, the prevalent risk-off mood further underpins the safe-haven buck.
The GBP/USD pair, meanwhile, fails to benefit from the better-than-expected UK Retail Sales figures for January.
This, along with a sustained break below the 1.2000 psychological mark and a technically significant 200-day SMA, suggests that the path of least resistance for spot prices is to the downside. Hence, some follow-through weakness back towards retesting the YTD low, around the 1.1840 area set in January, looks like a distinct possibility in the absence of any relevant US macro data.
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
AUD/USD corrects toward 0.6850, awaits US PCE Price Index
AUD/USD is falling back toward 0.6850 in Friday's Asian trading, reversing from near 19-month peak. A tepid US Dollar bounce drags the pair lower but the downside appears called by the latest Chinese stimulus measures, which boost risk sentiment ahead of US PCE data.
USD/JPY pares gains toward 145.00 after Tokyo CPI inflation data
USD/JPY is paring back gains to head toward 145.00 in the Asian session on Friday, as Tokyo CPI inflation data keep hopes of BoJ rate hikes alive. However, intensifying risk flows on China's policy optimism support the pair's renewed upside. The focus shifts to the US PCE inflation data.
Gold price consolidates below record high as traders await US PCE Price Index
Gold price climbed to a fresh all-time peak on Thursday amid dovish Fed expectations. The USD languished near the YTD low and shrugged off Thursday’s upbeat US data. The upbeat market mood caps the XAU/USD ahead of the key US PCE Price Index.
Avalanche rallies following launch of incentive program for developers
Avalanche announced the launch of Retro9000 on Thursday as part of its larger Avalanche9000 upgrade. Retro9000 is a program designed to support developers with up to $40 million in grants for building on the Avalanche testnet.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.