- GBP/USD has surrendered the psychological support of 1.220 amid negative market sentiment.
- The US Dollar is aiming higher as investors are expected that Fed’s interest rate will peak around 5.50-5.75%.
- Upbeat UK consumer spending is going to create more troubles for the BOPE ahead.
The GBP/USD pair surrendered the psychological support of 1.2200 in the early European session. The Cable witnessed selling pressure after failing to extend recovery above 1.2220 displayed in Tokyo. The major is expected to remain in the grip of bears amid a risk-off market mood.
An improvement in safe-haven’s appeal has supported the US Dollar index (DXY) to extend gains to near Monday’s high of around 105.40. Also, the 10-year US Treasury yields have scrolled above 3.59% and are expected to advance further amid rising expectations of a higher interest rate peak by the Federal Reserve (Fed). Meanwhile, S&P500 futures are displaying a lackluster performance showing an inability in recovering losses reported on Monday.
Positive synergy from US Nonfarm Payrolls and US ISM Services PMI data have cemented a higher interest rate peak by the Federal Reserve (Fed). Fed policymakers have already promised for a slowdown in the interest rate hike to reduce financial risks. Therefore, a deceleration in the interest rate hike pace seems solid but a higher interest rate peak cannot be ruled out as the current inflation rate is far from the targeted rate of 2%.
Chicago Fed President Charles Evans said on Friday, "We are probably going to have a slightly higher peak to Fed policy rate even as we slow pace of rate hikes," as reported by Reuters.
As per the CME Fedwatch tool, investors are expecting an interest rate peak around 5.50-5.75% by the end of CY2023.
On the United Kingdom front, upbeat consumer spending data failed to keep reins in the Pound Sterling. Like-For-Like Retail Sales reported by the British Retail Consortium (BRC) escalated to 4.1% from the prior release of 1.2% in November on an annual basis. This might create more troubles for the Bank of England (BOE) as upbeat retail sales cement higher inflation expectations in the near term.
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

GBP/USD holds gains near 1.2500 after UK GDP data
GBP/USD sustains bullish momentum and trades near 1.2500 in the European session on Thursday. Pound Sterling benefits from the improving risk mood and the upbeat UK data, which showed that the economy expanded at an annual rate of 1.4% in Q4, surpassing the market expectation of 1.1%.

EUR/USD stays strongly bid above 1.0400 ahead of EU data
EUR/USD trades with moderate gains abpve 1.0400 in the European session on Thursday. The pair draws support from risk-on sentiment-led unabated US Dollar selling as traders anticipate a likely end to the Russia-Ukraine war. EU and US data remain in focus.

Gold price struggles to capitalize on intraday gains amid receding Fed rate cut bets
Gold price attracts buyers for the second straight day amid a combination of supportive factors. Concerns about Trump’s trade tariff and a modest USD weakness underpin the XAU/USD pair.

Ripple's XRP eyes a recovery as investors switch toward accumulation
Ripple's XRP is up 2% in the early Asian session on Thursday following rising accumulation among investors and a potential bottom signal in the MVRV Ratio.

How the European Union could counter US tariffs
With Trump ordering a 25% import tax on all steel and aluminium entering the US, trade tensions are inching closer to Europe. We take a closer look at how European policymakers could react. Spoiler alert: it's complicated.

The Best Brokers of the Year
SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.