British Pound consolidates above 1.3200, its lowest since late June against a bullish USD
- GBP/USD holds steady during the Asian session as the USD pauses for a breather near a two-month top.
- The hawkish Fed and oil-driven inflation fears lift US bond yields to multi-year highs, favouring USD bulls.
- The divergent Fed-BoE outlooks further warrant caution before placing bullish bets on the currency pair.
The GBP/USD pair edges higher during the Asian session on Friday, trading above its lowest level since June 29, around the 1.3200 neighborhood, touched the previous day. Meanwhile, the fundamental backdrop seems tilted in favor of bearish traders and warrants caution before positioning for any meaningful recovery.
The US Dollar (USD) pauses for a breather following the recent strong rally to a nearly two-month high and turns out to be a key factor offering some support to the GBP/USD pair. However, the US Federal Reserve's (Fed) hawkish outlook, elevated US bond yields, and persistent geopolitical uncertainties favor USD bulls. Furthermore, the Bank of England's (BoE) more cautious holding or gradual easing bias amid stagflation fears suggests that the path of least resistance for the currency pair is to the downside.
According to the CME Group's FedWatch Tool, traders are now pricing in over a 65% chance that the US central bank will raise borrowing costs again in October following the recent 25 basis points (bps) rate hike earlier this month. Adding to this, oil-driven inflation fears underpin prospects for further Fed tightening and continue to push US bond yields to multi-year highs. This, in turn, validates the positive outlook for the buck, suggesting that the GBP/USD pair might attract fresh sellers at higher levels.
Traders now look forward to BoE Governor Andrew Bailey's scheduled speech for more cues about the future policy path, which will drive the British Pound (GBP). Later during the North American session, traders will take cues from the US macro data – Durable Goods Orders and the revised University of Michigan Consumer Sentiment Index. Moreover, comments from influential FOMC members should provide some impetus to the USD and produce trading opportunities around the GBP/USD pair.
GBP/USD daily chart
Technical Analysis
The GBP/USD pair continues to trade under the longer-term 200-day Simple Moving Average (SMA), which suggests that rallies are likely to be capped while sellers stay in control. The said SMA, at 1.3452, acts as the primary overhead barrier that bulls would need to reclaim to ease the current bearish tone.
On the downside, a break below 1.3300 would expose the year-to-date low, around 1.3265, touched in June. Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.95% | 1.30% | 1.17% | 1.10% | 1.44% | 1.06% | 0.70% | |
| EUR | -0.95% | 0.36% | 0.23% | 0.15% | 0.49% | 0.11% | -0.25% | |
| GBP | -1.30% | -0.36% | -0.23% | -0.21% | 0.12% | -0.25% | -0.61% | |
| JPY | -1.17% | -0.23% | 0.23% | -0.03% | 0.26% | -0.10% | -0.45% | |
| CAD | -1.10% | -0.15% | 0.21% | 0.03% | 0.40% | -0.06% | -0.39% | |
| AUD | -1.44% | -0.49% | -0.12% | -0.26% | -0.40% | -0.38% | -0.80% | |
| NZD | -1.06% | -0.11% | 0.25% | 0.10% | 0.06% | 0.38% | -0.35% | |
| CHF | -0.70% | 0.25% | 0.61% | 0.45% | 0.39% | 0.80% | 0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
