- GBP/USD lacks any firm direction and oscillates in a narrow trading range on Thursday.
- Subdued USD demand lends some support, though recession fears seem to cap the pair.
- Traders also seem reluctant ahead of the crucial FOMC/BoE policy meetings next week.
The GBP/USD pair struggles to capitalize on the overnight recovery from the 1.2100 neighbourhood, or the weekly low and oscillates in a range through the early European session on Thursday. The pair is currently trading around the 1.2200 round-figure mark, nearly unchanged for the day.
The latest optimism over the easing of COVID-19 curbs in China is seen undermining the safe-haven US Dollar, which, in turn, offers some support to the GBP/USD pair. That said, rebounding US Treasury bond yields, along with growing recession fears, should act as a tailwind for the greenback. Traders might also refrain from placing aggressive bets amid the uncertainty over the Fed's rate-hike path.
Market participants seem convinced that the US central bank will slow the pace of its policy tightening and have been pricing in a greater chance of a smaller 50 bps rate hike in December. That said, the incoming positive US macro data suggested that the economy remained resilient despite rising borrowing costs and fueled speculations that the Fed might lift rates more than recently projected.
Hence, the focus will remain glued to the FOMC monetary policy meeting on December 13-14, which will be followed by the Bank of England (BoE) meeting on Thursday. The UK central bank is expected to hike rates by 50 bps, though some analysts anticipate a larger 75 bps move. Nevertheless, the crucial central bank decisions should provide a fresh directional impetus to the GBP/USD pair.
In the meantime, a bleak outlook for the UK economy might hold back bulls from placing aggressive bets around the British pound amid absent relevant domestic macro data. The US economic docket, meanwhile, features the release of the usual Weekly Initial Jobless Claims. This, along with the US bond yields and the broader risk sentiment, will drive the USD and influence the GBP/USD pair.
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. 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 stays below 1.0900 as Q1 comes to an end
EUR/USD has lost its traction and declined below 1.0900 in the American session on Friday. Quarter-end flows seem to be allowing the US Dollar find some demand but the risk-positive market environment seems to be limiting the pair's downside ahead of the weekend.
GBP/USD trades below 1.2400, looks to post weekly gains
GBP/USD has edged lower after having tested 1.2400 earlier in the day but remains on track to end the third straight week in positive territory. The upbeat mood remains intact after soft PCE inflation data from the US, making it difficult for the US Dollar to continue to gather strength.
Gold tries to stabilize near $1,980 following earlier spike
Gold price has returned to the $1,980 area following a spike above $1,987 with the initial reaction to lower-than-expected PCE inflation figures from the US. Meanwhile, the benchmark 10-year US Treasury bond yield stays in the red near 3.5%, providing support to XAU/USD.
Will Dogecoin price pull an XRP and rally 60% next week?
Dogecoin price has been in a tight range bound movement since November 22. The recent recovery above the range low looks promising and hints at an explosive move for next week.
Week ahead – Nonfarm payrolls to set the tone for US dollar
With the banking turmoil receding, market participants will turn their attention back to economic releases. The spotlight will fall on the US employment report.