- GBP/USD consolidates gains on Tuesday in the early European trading hour.
- US Dollar Index stays strong near 93.50 ahead of Powell testimony.
- Mixed cues amid BOE rate hike signal, Brexit concern, higher gas prices keep sterling gains under check.
The GBP/USD pair prints mild gains on Tuesday morning after testing the high of 1.3728 in the overnight session. The pair retreated to 1.3700 following the comments from the policymakers of the UK and US central banks. At the time of writing, the GBP/USD pair is trading at 1.3707, up 0.07% on the day.
The US Dollar Index (DXY) trades, which tracks the performance of the greenback against its six major rivals, remains buoyant above 92.40 as investors digested hawkish Fed while worries over China’s economic recovery lingers. In addition to that, the US Durable Goods Orders jumped 1.8% in August much above the market consensus of a 0.7% increase.
The US benchmark 10-year Treasury yields rose to 1.50%, the highest since June 26 on the expectation that Fed would start tightening monetary policy soon, despite slower growth and higher inflation forecast for the year. Furthermore, Fed Chair Jerome Powell and US Treasury Secretary Jenet Yellen would appear before the US Senate’s Banking Committee to discuss Cares( the Coronavirus Aid, Relief,and Economy Security) Act oversight. Powell said in his remarks higher prices, hiring troubles could be sustained for longer than expected but considered them transitory.
On the other hand, the British pound gained following the Bank of England (BOE) Governor Andrew Bailey's speech to the Society of Professional Economists, where he warned that interest rate hike could come sooner than expected despite existing quantitative easing. Nevertheless, all the gains evaporated on the lingering Brexit concerns. In the latest development French European Affairs Minister Clement Beaune said that the current energy crisis in Britain reflected the “ intellectual fraud” that was Brexit.
As for now, traders keep their focus on the release of the US Goods Trade Balance, S&P/Case-Shiller Home Price, and CB Consumer Confidence data to gain some fresh trading impetus. Powell's testimony will be also in the spotlight.
GBP/USD additional levels
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