GBP/USD flirts with daily low, around 1.3000 mark amid broad-based USD strength
- GBP/USD witnessed some follow-through selling for the third successive day on Monday.
- Bets for a more aggressive Fed, the risk-off mood underpinned the safe-haven greenback.
- The fundamental backdrop supports prospects for a further depreciating move for the pair.
The GBP/USD pair extended its steady intraday descent and dropped to a fresh daily low, around the 1.3000 psychological mark during the first half of the European session.
Following an early uptick to the 1.3065 region, the GBP/USD pair met with a fresh supply on Monday and move back closer to the YTD low touched last week. This marked the third successive day of a negative move and was sponsored by sustained US dollar buying, bolstered by expectations for a more aggressive policy tightening by the Fed.
The markets seem convinced that the US central bank will hike interest rates at a faster pace to combat stubbornly high inflation. The bets were reaffirmed by hawkish comments from New York Fed President John Williams on Thursday, which was seen as a further sign that even more cautious policymakers are on board for bigger rate hikes.
This, along with concerns that a protracted Russia-Ukraine war would put upward pressure on commodity prices and the already high inflation, remained supportive of elevated US Treasury bond yields. Apart from this, the prevalent risk-off mood offered additional support to the safe-haven buck and exerted downward pressure on the GBP/USD pair.
That said, relatively thin liquidity conditions on the back of a holiday in Europe could help limit the downside for the GBP/USD pair amid absent relevant market moving economic releases from the US. Nevertheless, the bias seems tilted firmly in favour of bearish traders and supports prospects for a further near-term depreciating move.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
