GBP/USD edges higher to above 1.2450 amid hawkish sentiment surrounding Fed


  • GBP/USD rebounds from lows since November amid expectations of the Fed delaying rate cuts.
  • The escalated Middle-East tension could bolster the demand for the US Dollar.
  • BoE could reduce policy rates to around 4.75% by 2024, down from the current rate of 5.25%.

GBP/USD gains ground amid a stable US Dollar (USD), trading around 1.2460 during Asian hours on Monday. The US Dollar (USD) maintains its position below its peak since November 2023, potentially restricting the upward momentum of the GBP/USD pair.

US Dollar Index (DXY) hovers around 106.00, with the 2-year and 10-year yields on US Treasury bonds standing at 4.91% and 4.55%, respectively, by the press time. The elevated US yields may offer support to bolster the US Dollar (USD).

Meanwhile, the Federal Reserve (Fed) seems to reevaluate its monetary easing plans due to ongoing US inflation and robust macroeconomic indicators. According to the CME FedWatch Tool, there has been a notable increase in the likelihood of interest rates remaining unchanged at the June meeting, rising to 63.5% from 46.8% the previous week.

Investors will likely observe Federal Reserve Bank of Kansas President Lorie Logan while participating in a panel discussion at the BoJ-IMF conference on Monday. Furthermore, US Retail Sales figures will be eyed later in the North American session.

On the other side, on Friday, the Pound Sterling (GBP) dipped against the US Dollar to its lowest level since November, reaching 1.2426. Heightened tensions in the Middle East likely prompted traders to seek refuge in the US Dollar.

However, market forecasts for interest rate cuts by the Bank of England (BoE) have been adjusted, with the policy rate now expected to decline to around 4.75% by the end of 2024, down from the current rate of 5.25%. This marks a shift from the previous expectation of a drop to 4.5% by December.

BoE’s policymaker, Megan Greene emphasized that rate cuts in the United Kingdom (UK) should still be considered distant, pointing to a greater risk of persistent inflation in the UK compared to the US. Additionally, traders will likely pay close attention to the speech by Sarah Breeden, BoE's Deputy Governor for Financial Stability, at the Innovate Finance Global Summit 2024 on Monday.

GBP/USD

Overview
Today last price 1.2461
Today Daily Change 0.0012
Today Daily Change % 0.10
Today daily open 1.2449
 
Trends
Daily SMA20 1.263
Daily SMA50 1.2655
Daily SMA100 1.2669
Daily SMA200 1.2584
 
Levels
Previous Daily High 1.2559
Previous Daily Low 1.2427
Previous Weekly High 1.2709
Previous Weekly Low 1.2427
Previous Monthly High 1.2894
Previous Monthly Low 1.2575
Daily Fibonacci 38.2% 1.2477
Daily Fibonacci 61.8% 1.2508
Daily Pivot Point S1 1.2398
Daily Pivot Point S2 1.2346
Daily Pivot Point S3 1.2266
Daily Pivot Point R1 1.253
Daily Pivot Point R2 1.261
Daily Pivot Point R3 1.2661

 

 

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