GBP/USD bulls pressured as US dollar bounces back to life
|- Sterling is pressured as the US dollar battles back to life.
- The focus will turn to the US inflation data later this week while UK politics hamstrings GBP.
At 1.2577, GBP/USD is under a little pressure in Tokyo after sliding from a high of 1.2597 and reaching a low of 1.2566. In the prior session, sterling dropped to its lowest level in nearly three weeks at 1.2433 before trimming losses in a surge of demand when London flipped over despite the political headwinds for British Prime Minister Johnson. The greenback was sold off which save the day for cable longs.
Boris Johnson survived a confidence vote of 211 to 148, but his 59% share of the vote was less than the 63% achieved by his predecessor Theresa May in her confidence vote of December 2018 who was replaced seven months later, as Reuters remarked. The victory was bitter given he now faces a leadership challenge. With so many of his party had voted against him, the prime minister has effectively lost his majority support in parliament, with the risk that his government is paralysed.
Meanwhile, as measured by the 10-year Treasury yield, yields were falling overnight for the second day of trade this week, down from the 3.062% highs to print lows of 2.963%. Consequently, the greenback was dropping to the lows of the day near 102.30as measured by the US dollar index (DXY), vs. a basket of six currencies. In Asia, DXY is regaining some ground, up 0.18% and reaching a high of 102.558.
Meanwhile, besides the European Central Bank this week, traders will be looking to the US inflation data due Friday for clues on the Federal Reserve's interest rate hike trajectory. We are in a blackout period in terms of Fed speakers. The event will be an important one ahead of the Federal Open Market Committee meeting on June 14-15 where another 50 basis points of rate hikes are currently being priced in.
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.