- GBP/USD has started to edge higher amid broad dollar weakness.
- Market pricing of a 15 bps BoE rate hike in December is losing traction.
- Investors eye coronavirus headlines as safe-haven flows dominate financial markets.
After dipping below 1.3300 earlier in the day, GBP/USD has managed to gain traction in the early European session and started to push higher toward mid-1.3300s on heavy selling pressure surrounding the dollar. However, the British pound could have a difficult time preserving its strength with investors reassessing the impact of the new coronavirus variant on the Bank of England's (BoE) policy outlook.
The UK interest rate futures are currently pricing a 55% chance of a 15 basis points BoE rate hike in December, compared to a 75% probability on Thursday.
British Health Secretary Sajid Javid announced on Friday that flights from six African countries will be banned from 12:00 GMT on Friday. The World Health Organization (WHO) is expected to hold a press conference later in the day and markets fear over the possibility of current vaccines being ineffective against the heavily-mutated new variant.
On the other hand, the benchmark 10-year US Treasury bond yield is falling nearly 7% and weighing heavily on the dollar. The CME Group's FedWatch Tool shows that investors have already started to doubt a Fed rate hike by June 2022. There won't be any high tier data releases in the remainder of the day and bond markets will close early due to the Thanksgiving holiday. Ahead of the weekend, the pair could extend its technical correction but the fundamental outlook doesn't yet point to a steady recovery.
GBP/USD Technical Analysis
GBP/USD is currently trading near the descending trend line coming from November 18 at 1.3340. The 20-period SMA on the four-hour chart is reinforcing that resistance and additional gains toward 1.3380 (static level) and 1.3400 (psychological level, 50-period SMA) could be witnessed in case buyers manage to flip the 20-period SMA into support.
In the meantime, buyers are encouraged by the Relative Strength Index (RSI) rising toward 50.
On the downside, 1.3300 (psychological level) aligns as initial support ahead of 1.3280 (daily low).
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.