- GBP/USD buyers take a breather at one-month high, probing four-day uptrend.
- Broad-based US Dollar weakness propels Cable pair despite geopolitical, Brexit uncertainty in the UK.
- US Treasury bond yields, Fed Fund Futures slumps as US regulators rescue SVB, Signature Bank.
- UK jobs report, US CPI will be crucial but risk catalysts may gain major attention.
GBP/USD prods a four-day winning streak near 1.2180, after poking the highest level in a month to 1.2199 the previous day. In doing so, the Cable pair takes a breather ahead of the key statistics from the UK and the US. Apart from the pre-data anxiety, mixed concerns surrounding UK politics and Brexit also probe the momentum traders of the pair, after witnessing the biggest daily jump in nine weeks.
That said, the quote’s previous losses could be linked to the broad-based US Dollar slump. US Dollar Index (DXY) began the week’s trading on a back foot, printing a three-day south-run while declining the most in two months on Monday. With this, the greenback’s gauge versus the six major currencies traced the US Treasury bond yields as hawkish bets on the Federal Reserve (Fed) reverberate.
It should be noted that the US two-year Treasury bond yields marked the biggest daily slump since October 1987 by declining more than 13.0% on a day as US banking regulators rushed to defend the Silicon Valley Bank (SVB) and the Signature Bank. Further, the US 10-year Treasury bond yields slumped to the monthly low amid a sudden shift in the market’s Fed bets due to the financial market risks emanating from the stated banks.
US banking regulators undertook joint actions to tame the risks emanating from SVB and Signature Bank during the weekend. While announcing the plan, US President Joe Biden noted on Monday that investors in those banks will not be protected and reminded that "no one is above the law." However, the US President also vowed to take whatever action was needed to ensure the safety of the US banking system, per Reuters.
While portraying the latest shift in the US Fed Fund Futures, Reuters said that the US rate futures on Monday have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause. The market last week was poised for a 50-bps increase prior to the SVB collapse.
Elsewhere, the US-China tussles escalate while the UK joins hands with the US and Australia to provide Canberra with nuclear-powered attack submarines, a major step involving an investment of hundreds of billions of dollars aimed at countering China's ambitions in the Indo-Pacific, reported Reuters. Further, Brexit optimism fades amid the broad market anxiety. While portraying the mood, Wall Street closed mixed while Gold managed to remain firmer amid broad US Dollar weakness, as well as due to the metal’s traditional safe-haven status.
It’s worth noting that news conveying Britain's Finance Minister Jeremy Hunt, as he announces a plan to create 12 "investment zones" in England also favors the GBP/USD buyers. “Ahead of Hunt's annual budget on Wednesday, the finance ministry said each of the zones will be backed by 80 million pounds spread over five years that can be directed towards tax relief for businesses, training and infrastructure,” stated Reuters.
Looking ahead, the UK employment report will be crucial to watch for immediate directions as the central bank haws retreat. Following that, the US Consumer Price Index (CPI) for February will be important to watch for clear directions. Forecasts suggest a slight reduction in the UK’s Claimant Count Change and Unemployment Rate jostling with a minor fall in the Average Earnings. On the other hand, the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.
To sum up, the mixed expectations from the UK and the US data join the market’s latest attention on the financial risks and a fall in the Treasury bond yields to dim the importance of today’s economic calendar for the GBP/USD pair traders. Even so, the quote is likely to remain firmer amid broad US Dollar weakness.
Also read: US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm
The first daily closing above the 50-DMA in five weeks, enables the GBP/USD bulls to aim for the mid-February swing high surrounding 1.2270.
Additional important levels
|Today last price||1.218|
|Today Daily Change||0.0155|
|Today Daily Change %||1.29%|
|Today daily open||1.2025|
|Previous Daily High||1.2114|
|Previous Daily Low||1.1908|
|Previous Weekly High||1.2114|
|Previous Weekly Low||1.1803|
|Previous Monthly High||1.2402|
|Previous Monthly Low||1.1915|
|Daily Fibonacci 38.2%||1.2035|
|Daily Fibonacci 61.8%||1.1987|
|Daily Pivot Point S1||1.1918|
|Daily Pivot Point S2||1.181|
|Daily Pivot Point S3||1.1712|
|Daily Pivot Point R1||1.2124|
|Daily Pivot Point R2||1.2222|
|Daily Pivot Point R3||1.233|
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD closes in on 1.0700 amid broad USD strength
EUR/USD came under renewed bearish pressure in the American session and dropped to its lowest level since late March near 1.0700. Stronger-than-forecast PCE inflation data and hawkish comments from Fed's Mester provide a boost to the US Dollar and weigh on the pair.
GBP/USD loses bullish momentum after US data, falls below 1.2350
GBP/USD has reversed its direction and erased a large portion of its daily gains on Friday after the data from the US showed that the annual core PCE inflation edged higher to 4.7% in April. Although the pair clings to small daily gains below 1.2350, it remains on track to end the third straight week in negative territory.
Gold erases daily gains, holds above $1,940
Gold price turned south and declined to the $1,940 area in the American session on Friday. The benchmark 10-year US Treasury bond yield holds stead above 3.8% after stronger-than-expected core PCE inflation data from the US, not allowing XAU/USD to gain traction.
Ethereum price to outpace Bitcoin price as ETH jumps over key hurdle where BTC fumbles
ETH is working on its recovery after it dipped to a two-week low on Thursday. While Bitcoin price has failed to make a similar move and head back above $26,500, Ethereum is outpacing Bitcoin and has been able to push above $1,800.
Ford Stock: New agreement will give customers access to 12,000 Tesla chargers
Ford (F) stock has advanced about 2.5% early Friday following CEO Chris Farley’s announcement that Ford owners will be able to charge their EVs at Tesla Superchargers beginning in early 2024.