- GBP/USD edges lower during the Asian session on Wednesday and is pressured by a bullish USD.
- The stronger UK wage growth data puts pressure on the BoE to hike further and should limit losses.
- Traders also prefer to wait for the release of FOMC minutes before placing fresh directional bets.
The GBP/USD pair extends the overnight pullback from a multi-day top, around mid-1.2700s and continues losing ground through the Asian session on Wednesday. Spot prices slid back below the 1.2700 round-figure mark and remain well within the striking distance of the 100-day Simple Moving Average (SMA) support near the 1.2620-1.2615 region, or the lowest level since June 30 touched on Monday.
The underlying bullish sentiment surrounding the US Dollar (USD), bolstered by expectations that the Federal Reserve (Fed) will stick to its hawkish stance, turns out to be a key factor exerting some downward pressure on the GBP/USD pair. Investors seem convinced that the US central bank will keep interest rates higher for longer and the bets were reaffirmed by the upbeat US Retail Sales data released on Tuesday, which indicated that consumer spending held up well in July.
That said, a 20 points slump in the Empire State Manufacturing Index to a reading of -19 in August reaffirms market expectations that the Fed will pause its rate-hiking cycle at the upcoming meeting in September. This, in turn, holds back the USD bulls from placing fresh bets and might lend some support to the GBP/USD pair. Traders also seem reluctant and prefer to wait for the release of the FOMC meeting minutes, which might provide fresh cues about the future rate-hike path.
Heading into the key event risk, traders will take cues from the US economic docket, featuring the release of Building Permits, Housing Starts and Industrial Production figures. In the meantime, strong wage growth data, which added to worries about long-term inflation and might force the Bank of England (BoE) to raise interest rates further, should contribute to limiting losses for the GBP/USD pair. This warrants caution before positioning for any further intraday downfall.
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 retreats from daily highs, holds above 1.0800
EUR/USD loses traction but holds above 1.0800 after touching its highest level in three weeks above 1.0840. Nonfarm Payrolls in the US rose more than expected in June but downward revisions to May and April don't allow the USD to gather strength.
GBP/USD struggles to hold above 1.2800 after US jobs data
GBP/USD spiked above 1.2800 with the immediate reaction to the mixed US jobs report but retreated below this level. Nonfarm Payrolls in the US rose 206,000 in June. The Unemployment Rate ticked up to 4.1% and annual wage inflation declined to 3.9%.
Gold approaches $2,380 on robust NFP data
Gold intensifies the bullish stance for the day, rising to the vicinity of the $2,380 region following the publication of the US labour market report for the month of June. The benchmark 10-year US Treasury bond yield stays deep in the red near 4.3%, helping XAU/USD push higher.
Crypto Today: Bitcoin, Ethereum and Ripple lose key support levels, extend declines on Friday
Crypto market lost nearly 6% in market capitalization, down to $2.121 trillion. Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) erased recent gains from 2024.
French Elections Preview: Euro to “sell the fact” on a hung parliament scenario Premium
Investors expect Frances's second round of parliamentary elections to end with a hung parliament. Keeping extremists out of power is priced in and could result in profit-taking on Euro gains.