- GBP/USD stays pressured after retreating from weekly top.
- Unimpressive UK employment figures contrast with positive surprise from US data to prod Pound Sterling buyers.
- BoE, Fed officials cite inflation, employment numbers to defend hawkish plays.
- Easing fears of US default joins hopes of witnessing upbeat comments from BoE Governor Bailey to challenge Cable bears.
GBP/USD remains depressed around 1.2485 amid early Wednesday, after reversing from a weekly high the previous day. In doing so, the Pound Sterling justifies the market’s indecision amid a pause in the US Dollar’s run-up and cautious mood ahead of the Bank of England (BoE) Governor Andrew Bailey’s speech.
That said, the US Dollar Index (DXY) retreats to 102.57 following Tuesday’s upbeat performance as market sentiment improved on hopes of no US default. That said, US President Joe Biden and top congressional Republican Kevin McCarthy’s meeting ended within an hour and raised expectations of positive development as congressional leaders, said, "It is possible to get a deal by the end of the week."
While portraying the optimism, Reuters quotes the S&P Global Market Intelligence data while marking a fall in the one-year US Credit Default Swap (CDS) spreads from 164 basis points (bps) to 155 bps. “Spreads on five-year CDS decreased to 69 basis points from 72 bps on Monday,” reported the news. On the same line, the US Treasury bond yields grind higher after posting a notable rally whereas S&P500 Futures print mild gains to defy Wall Street’s downbeat performance.
It’s worth noting, however, that a contrasting play between the US and the UK data seems to weigh on the Cable prices of late.
On Tuesday, UK Claimant Count Change jumped by 46.7K in April versus -10.8K expected and 26.5K prior while ILO Unemployment Rate for three months to March rose to 3.9% against expectations of witnessing no change figure of 3.8%. Further, the Average Earnings excluding bonus and including for three months to March came in unimpressive despite crossing the forecasts.
On the other hand, US Retail Sales improved to 0.4% MoM for April, from -0.7% prior (revised) versus 0.7% expected. More importantly, Retail Sales Control Group for the said month crossed market forecasts of 0.0% and -0.4% prior with 0.7% actual figure whereas Retail Sales ex Autos matches 0.4% MoM estimations for April¸ surpassing the -0.5% prior. Further, the US Industrial Production MoM rose to 0.5% for April versus expectations of printing a 0.0% figure.
It should be noted that BoE Chief Economist Huw Pill recently followed the footsteps of BoE Governor Bailey while trying to push back the dovish hopes after the “Old Lady”, as the UK central bank is informally known, announced a dovish hike in the last week.
Moving on, BoE’s Bailey needs to repeat the hawkish comments and should stop citing easy inflation to recall the Pound Sterling buyers. Even so, the second-tier US housing data and risk catalysts will be the key to determining near-term GBP/USD moves.
Technical analysis
GBP/USD grinds between a three-week-old ascending support line and the 10-DMA, respectively near 1.2450 and 1.2555, as downside bias gains momentum.
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
USD/JPY holds positive ground around 151.50 following Japanese CPI data
The USD/JPY pair holds positive ground for the second consecutive day near 151.45 on Friday during the early Asian trading hours. The cautious approach from the Bank of Japan to keep monetary conditions accommodative exerts some selling pressure on the Japanese Yen.
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Top 3 Price Prediction BTC, ETH, XRP: Retail watches from the sidelines with a bias for shorts
Bitcoin is showing strength as markets head into the Easter holidays. As it rises, altcoins are following suit, with Ethereum and Ripple posting almost similar gains. Meanwhile, there remains an unfilled CME Gap, with a lot of liquidity also resting above and below BTC price.
Bears have been standing before a steamroller so far this year
Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.