- GBP/USD drifts lower for the second straight day amid some follow-through USD buying.
- Bets for a 25 bps Fed lift-off in June push the US bond yields higher and underpin the USD.
- The risk-on mood could cap gains for the safe-haven buck and lend support to the major.
The GBP/USD pair kicks off the new week on a weaker note and retreats further from its highest level since May 16, around the 1.2540-1.2545 region touched on Friday. Spot prices extend the steady intraday descent through the early European session and drop to the 1.2400 neighbourhood, or a fresh daily low in the last hour.
The post-NFP US Dollar (USD) bounce from over a one-week low remains uninterrupted amid the uncertainty over the Federal Reserve's (Fed) rate-hike path and drags the GBP/USD pair lower for the second successive day. It is worth recalling that a slew of influential Fed officials last week backed the case for skipping an interest rate hike, though the markets are still pricing in the possibility of another 25 bps lift-off in June.
Moreover, investors scaled back their expectations for an imminent pause in the Fed's rate hiking cycle to July and eased off on bets for rate cuts later in the year following the release of the mixed US monthly employment details on Friday. This remains supportive of a further rise in the US Treasury bond yields and continues to underpin the Greenback, which, in turn, is seen exerting downward pressure on the GBP/USD pair.
That said, the prevalent risk-on environment might hold back traders from placing aggressive bullish bets around the safe-haven buck and lend support to the GBP/USD pair. The passage of legislation to lift the government's $31.4 trillion debt ceiling to avert an unprecedented American default, along with hopes of a recovery in China, boost investors' confidence and is evident from a generally positive tone around the equity markets.
Apart from this, firming expectations for additional interest rate hikes by the Bank of England (BoE), bolstered by stronger-than-expected UK consumer inflation figures for May, might contribute to limiting losses for the GBP/USD pair. Market participants now look forward to the release of the final UK Services PMI for a fresh impetus ahead of the US ISM Services PMI, due later during the early North American session.
Technical levels to watch
|Today last price||1.2401|
|Today Daily Change||-0.0049|
|Today Daily Change %||-0.39|
|Today daily open||1.245|
|Previous Daily High||1.2545|
|Previous Daily Low||1.2442|
|Previous Weekly High||1.2545|
|Previous Weekly Low||1.2327|
|Previous Monthly High||1.268|
|Previous Monthly Low||1.2308|
|Daily Fibonacci 38.2%||1.2481|
|Daily Fibonacci 61.8%||1.2505|
|Daily Pivot Point S1||1.2413|
|Daily Pivot Point S2||1.2376|
|Daily Pivot Point S3||1.2309|
|Daily Pivot Point R1||1.2516|
|Daily Pivot Point R2||1.2582|
|Daily Pivot Point R3||1.2619|
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.