- GBP/USD has slipped near 1.3150 ahead of BOE Governor Bailey's speech.
- The risk-off impulse due to the resurgence of Covid-19 in China has improved safe-haven appeal.
- UK’s CPI at 6.2% indicates one more rate hike by the BOE in May.
The GBP/USD pair has witnessed selling pressure in early Tokyo, which has drifted the pair lower towards 1.3156. The cable has violated two-trading sessions low at 0.3156 and is eyeing more weakness ahead of the Bank of England (BOE) Governor Andrew Bailey's speech, which is due on Monday.
The market participants are waiting for the speech from BOE’s Bailey as it will provide further guidance to the pound buyers for the likely monetary policy action in May. BOE’s Bailey and his colleagues have already increased their interest rates to 0.75% to combat the inflation mess. The BOE has increased its interest rates by 25 basis points (bps) each time in its last three monetary policy meets and has been the first central bank worldwide that has raised its interest rates post the Covid-19 pandemic. Also the last week’s Consumer Price Index (CPI) print of 6.2% has advocated one more interest rate hike going forward. The CPI at 6.2% was much higher than the estimate of 5.9% and the previous print of 5.5%.
Meanwhile, the US dollar index (DXY) has scaled above 99.00 amid rising cases of Covid-19 in China. The situation of Lockdown in China has underpinned the risk-aversion theme and investors are shifting funds to safe-haven assets. This week, the DXY is likely to be dictated by the unfolding of the US Nonfarm Payrolls (NFP), which will be announced on Friday. A preliminary estimate for the US NFP is 488K against the previous print of 678K.
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