|

GBP/USD trades with positive bias around 1.3075 area, lacks follow-through ahead of US CPI

  • GBP/USD edges higher amid subdued USD price action, though the upside seems limited.
  • Expectations for more aggressive BoE policy easing undermine the GBP amid a bullish USD.
  • Bulls also seem reluctant ahead of Thursday’s release of the US consumer inflation figures.

The GBP/USD pair trades with a mild positive bias around the 1.3075 area during the Asian session on Thursday, albeit it lacks bullish conviction and remains within the striking distance of a nearly one-month low touched the previous day. 

The US Dollar (USD) consolidates its recent strong gains to the highest level since August 16 and continues to draw support from rising bets for a regular 25 basis points (bps) interest rate cut by the Federal Reserve (Fed) in November. The expectations were reaffirmed by the FOMC meeting minutes released on Wednesday, which showed a consensus that the outsized rate cut would not lock the central bank into any specific pace for future cuts. This keeps the yield on the benchmark 10-year US government bond elevated above the 4% threshold, or its highest level since July 31, which continues to underpin the buck and acts as a headwind for the GBP/USD pair. 

Meanwhile, last week's dovish remarks by the Bank of England (BoE) Governor Andrew Bailey suggested that the central bank might be heading towards speeding up its rate-cutting cycle. This, in turn, might contribute to the British Pound's (GBP) relative underperformance and cap any meaningful upside for the GBP/USD pair. Traders might also prefer to wait for the release of the US consumer inflation figures, which along with the US Producer Price Index (PPI) on Friday, might influence expectations about the Fed's rate-cut path. This, in turn, will drive the USD demand in the near term and provide some meaningful impetus to the currency pair. 

Heading into the key data risks, traders on Thursday might take cues from the BoE Credit Conditions Survey to grab short-term opportunities. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the GBP/USD pair is to the downside, suggesting that any subsequent move up might still be seen as a selling opportunity. Spot prices seem poised to extend the recent sharp pullback from the 1.3435 area, or the highest level since March 2022 touched last month.

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

 USDEURGBPJPYCADAUDNZDCHF
USD -0.04%-0.05%-0.06%-0.03%-0.17%-0.44%-0.00%
EUR0.04% 0.00%-0.02%-0.01%-0.10%-0.36%0.04%
GBP0.05%-0.00% -0.02%0.00%-0.18%-0.37%-0.01%
JPY0.06%0.02%0.02% 0.02%-0.23%-0.49%-0.06%
CAD0.03%0.00%-0.01%-0.02% -0.15%-0.36%-0.01%
AUD0.17%0.10%0.18%0.23%0.15% -0.26%0.17%
NZD0.44%0.36%0.37%0.49%0.36%0.26% 0.36%
CHF0.00%-0.04%0.00%0.06%0.00%-0.17%-0.36% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD clings to small gains near 1.1750

Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key data releases from the US and the ECB policy announcements.

GBP/USD edges higher toward 1.3400 ahead of US data and BoE

GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.

Gold pulls away from session high, holds above $4,300

Gold loses its bullish momentum and retreats below $4,350 after testing this level earlier on Monday. XAU/USD, however, stays in positive territory as the US Dollar remains on the back foot on growing expectations for a dovish Fed policy outlook next year.

Solana consolidates as spot ETF inflows near $1 billion signal institutional dip-buying

Solana price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout. On the institutional side, demand for spot Solana Exchange-Traded Funds remained firm, pushing total assets under management to nearly $1 billion since launch. 

Big week ends with big doubts

The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.

Solana Price Forecast: SOL consolidates as spot ETF inflows near $1 billion signal institutional dip-buying

Solana (SOL) price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout.