GBP/USD eyes fourth weekly loss amid UK’s economic pessimism
- GBP/USD takes offers to refresh intraday low, pares the biggest daily gains in two weeks.
- UK PM Sunak is up for a bitter announcement, British commercial properties remain weak.
- US Dollar licks its wounds as UK-based data firm hints higher Covid-led deaths, yields pause previous fall.
- Second-tier data, risk catalysts will be eyed for fresh impulse.
GBP/USD reverses the previous day’s gains, the biggest in two weeks, while taking offers to refresh the intraday low around 1.2040 heading into Friday’s London open. In doing so, the Cable pair justifies the downbeat signals surrounding the British economy, as well as the recent pause in the downside of the US Treasury yields and the US Dollar.
The Times’ news suggesting UK Prime Minister’s readiness for halving financial support on energy bills for businesses, amid concerns about the cost, seemed to have exerted downside pressure on the GBP/USD prices. “The report comes after British public borrowing during last month hit its highest for any November on record, reflecting the mounting cost of energy subsidies, debt interest and the reversal of an increase in payroll taxes,” per the news.
On the same line is the Financial Times (FT) update stating that the UK commercial property values and rents are predicted to “tumble off a cliff edge” in the first quarter of 2023.
Furthermore, labor strikes in the UK become fierce and weigh on the GBP/USD prices. “Britain has been hit by a wave of strikes by public sector workers pressing for better pay deals in the face of decades-high inflation rates,” said Reuters.
Also weighing on the GBP/USD price is the UK-based health data firm Airfinity’s stated mentioning that around 9,000 people in China are probably dying each day from COVID-19, double the numbers expected the previous day and higher than the official figures conveyed by China.
However, the hopes of a peak in the virus numbers in China and the discovery of an anti-Covid pill joins the chatters of no economic slowdown in the US and Europe to put a floor under the GBP/USD prices, via challenging the US Dollar’s haven demand.
Amid these plays, US 10-year Treasury yields fade the previous day’s pullback from the six-week high and take rounds to 3.8% whereas the S&P 500 Futures print mild losses around 3,865 despite Wall Street’s positive closing.
Moving on, GBP/USD is likely to remain pressured as the British leaders have multiple negatives to tackle as compared to their US counterparts.
Technical analysis
Repeated failure to cross the 200-day Exponential Moving Average (EMA), around 1.2115 by the press time, keeps GBP/USD bears hopeful.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
