GBP/USD steady above 1.3700 despite broad-US dollar strength
|- GBP/USD hovers around 1.3709 as the European session closes.
- BoE’s hawkishness boosts the prospects of the British pound.
- US Durable Good Orders in August expanded 1.8%, more than July’s 0.5%.
- Chicago’s Fed President Evans commented that the US economy is close to meeting the Fed’s bar for bond tapering.
After closing in the back foot on the last week, the GBP/USD is recovering, trading at 1.3704 up 0.12% at the time of writing.
Market-mood is upbeat, as European indices are trading higher, while it is a mixed bag in the US. The Dow Jones Industrial Average (DJIA) is up to 35,041.12, gaining 0.70%, whereas the S&P 500 and the Nasdaq are down 0.09% and 0.95%, respectively.
US Dollar Index holds to last week gains
The US Dollar Index (DXY), which measures the greenback’s performance against a basket of six-peers, is steady up 0.14% at 93.40, underpinned by rising yields with the US 10-year Treasury yield recording gains of 1.20% at 1.478%.
In the UK, the economic docket is empty. However, wires reported that 50-90% of natural gas stations are running dry in some areas, and this shortage could derail the recovery.
On Thursday of last week, the Bank of England held interest rates and its bond purchases unchanged. Nevertheless, hinted that a hike might be on the cards, even before the central bank tapers its bond-buying program. The decision is influenced by rising prices, as the BoE expects inflation to rise to 4%.
Meanwhile, the US Census Bureau released Durable Good Orders data for August, figures rose by 1.8% more than the 0.7% foreseen by analysts, smashing the previous month’s reading of 0.5%. Excluding defense, new orders increased 2.4% against the -0.5% expected. Demand for durable goods has expanded 15 of the last 16 months.
Early during the New York session, Chicago’s Fed President Charles Evans crossed the wires.
He commented that the US economy is close to meeting the Fed’s bar for beginning to reduce its bond purchase program. Further, an improvement in the labor market will likely meet the bar soon set by the central bank, and bond tapering can begin.
Later during the day, New York’s Fed President John C. Williams and Fed’s Governor Lael Brainard will hit the wires.
KEY TECHNICAL LEVELS TO WATCH
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