GBP/USD remains on the defensive amid stronger USD, moves little post-US PCE data
|- GBP/USD retreats over 100 pips from the weekly high touched earlier this Friday.
- The emergence of fresh USD buying turns out to be a key factor exerting pressure.
- The US PCE data does little to provide any impetus, though favours the USD bulls.
The GBP/USD pair retreats sharply from the 1.1235 region, or the weekly high touched this Friday and refreshes the daily low during the early North American session. Spot prices, however, recover a few pips and hold steady just above the 1.1050 area post-US macro data.
The US dollar makes a solid comeback on the last day of the week and stalls its recent sharp corrective decline from a two-decade high. This turns out to be a key factor behind the GBP/USD pair's intraday turnaround. The USD sticks to its intraday gains following the release of stronger-than-expected US Personal Consumption Expenditures (PCE) data.
The US Bureau of Economic Analysis reported that PCE Price Index eased to 6.2% YoY in August from 6.4% in the previous month, missing expectations for a rise to 6.6%. The disappointment from the headline print, however, was offset by the Core PCE Price Index (the Fed's preferred inflation gauge) which rose by 0.6% and to a 4.7% YoY rate during the reported month.
The data all but reaffirmed market bets that the Federal Reserve will stick to a more aggressive rate hiking cycle to curb persistently high inflation. This triggers an intraday recovery in the US Treasury bond yields, which, along with the prevalent risk-off environment, underpins the safe-haven greenback and continues to weigh on the GBP/USD pair.
That said, the lack of any follow-through selling warrants some caution before confirming that the strong recovery from an all-time low touched on Monday has run out of steam. Nevertheless, the GBP/USD pair, for now, seems to have snapped a three-day winning streak, though remains on track to register strong weekly gains.
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.