- GBP/USD drifts lower for the third successive day and drops to a multi-week low on Thursday.
- A combination of factors continues to push the USD higher and exert pressure on the major.
- The fundamental backdrop supports prospects for a further near-term depreciating move.
The GBP/USD pair extends this week's retracement slide from the vicinity of the 1.2300 mark and remains under some selling pressure for the third successive day on Thursday. The pair weakens further below the 1.2100 round figure, hitting over a three-week low during the Asian session, and is pressured by sustained US Dollar (USD) buying interest.
Growing acceptance that the Federal Reserve (Fed) will stick to its hawkish stance remains supportive of elevated US Treasury bond yields and continues to underpin the Greenback. In fact, the markets are still pricing in the possibility of one more Fed rate hike move by the end of this year. This allows the yield on the benchmark 10-year US government bond to hold steady close to a 16-year peak, around the 5% psychological mark touched earlier this week. Apart from this, a generally weaker risk tone turns out to be another factor benefitting the safe-haven buck, which, in turn, is seen exerting some pressure on the GBP/USD pair.
The British Pound (GBP), on the other hand, is weighed down by expectations that the Bank of England (BoE) will keep interest rates on hold at a 15-year high of 5.25% on November 2 on the back of looming recession risks. The bets were lifted by softer UK labour market data and flash PMI prints, which should allow the BoE to keep interest rates on hold. This contributes to the offered tone surrounding the GBP/USD pair and supports prospects for a further near-term depreciating move. In the absence of any relevant market-moving economic releases from the UK, traders now look to the US macro data for some meaningful impetus.
Thursday's US economic docket highlights the release of the first estimate (Advance) of the US GDP print for Q3, along with Durable Goods Orders, due later during the early North American session. This, along with Fed Governor Christopher Waller's scheduled speech and the US bond yields, should influence the USD. Apart from this, the post-ECB volatility in the market should produce short-term trading opportunities around the GBP/USD pair. Nevertheless, the aforementioned fundamental backdrop favours bearish traders and suggests that the path of least resistance for spot prices remains to the downside.
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
EUR/USD struggles to hold above 1.0400 as mood sours
EUR/USD stays on the back foot and trades near 1.0400 following the earlier recovery attempt. The holiday mood kicked in, keeping action limited across the FX board, while a cautious risk mood helped the US Dollar hold its ground and forced the pair to stretch lower.
GBP/USD approaches 1.2500 on renewed USD strength
GBP/USD loses its traction and trades near 1.2500 in the second half of the day on Monday. The US Dollar (USD) benefits from safe-haven flows and weighs on the pair as trading conditions remain thin heading into the Christmas holiday.
Gold drops to $2,620 area as US bond yields edge higher
Gold struggles to build on Friday's gains and trades modestly lower on the day near $2,620. The benchmark 10-year US Treasury bond yield edges slightly higher above 4.5%, making it difficult for XAU/USD to gather bullish momentum.
Bitcoin fails to recover as Metaplanet buys the dip
Bitcoin hovers around $95,000 on Monday after losing the progress made during Friday’s relief rally. The largest cryptocurrency hit a new all-time high at $108,353 on Tuesday but this was followed by a steep correction after the US Fed signaled fewer interest-rate cuts than previously anticipated for 2025.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.