GBP/USD rebounds from 1.2320 as USD Index retreats amid risk-on mood
|- GBP/USD has sensed buying interest near 1.2320 as USD Index has retreated.
- S&P500 futures are continuously adding gains as the appeal for risk-sensitive assets has accelerated.
- UK growth rate is expected to remain stagnant in the fourth quarter.
The GBP/USD pair has shown a recovery move after a gradual correction to near 1.2320 in the Asian session. The Cable is aiming to recapture the immediate resistance of 1.2350 as the US Dollar Index (DXY) has retreated after a rebound to near 102.60. Bearish bets have resumed for the US Dollar Index (DXY) amid easing fears of the United States banking crisis and rising odds of a steady stance on interest rates by the Federal Reserve (Fed) ahead.
The USD Index is expected to revert to its intraday low of 102.40 as the risk appetite of the market participants is improving further. S&P500 futures are continuously adding gains as the appeal for risk-sensitive assets has accelerated. US equities have hogged the limelight as ebbing fears of US banking shakedown are fueling confidence among the market participants.
Meanwhile, the demand for US government bonds has rebounded, which has trimmed the 10-year US Treasury yields to 3.55%.
The Pound Sterling has gained sufficient strength as Bank of England (BoE) Governor Andrew Bailey won’t shy of hiking rates further if there would be evidence of persistent inflation. The street is anticipating that the BoE cannot dodge more rate hikes as the double-digit United Kingdom inflation would not come down easily.
For further guidance, investors will keep an eye on UK Gross Domestic Product (GDP) data, which is scheduled for Friday. As per the consensus, UK’s growth has remained stagnant in the fourth quarter of CY2022. Annual GDP is expected to remain steady at 0.4%. The UK economy is expected to witness a deep recession due to the synergetic effect of stagnant growth and sticky inflation.
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