- GBP/USD stays in green territory, though under pressure as sentiment shifts sour.
- The US Dollar Index erases earlier gains, cushioning the Pound Sterling advance.
- BoE’s Bailey: Inflation is down due to energy prices falling; monetary and fiscal policy would do the rest of the job.
GBP/USD climbed above the 1.2600 figure during the early morning in the North American session after bouncing from daily lows of 1.2590 due to data portraying the UK economy’s resilience despite the Bank of England’s (BoE) tightening. The pair is trading at 1.2607, clinging to 0.10% gains at the time of writing.
BoE Bailey remains hawkish but risk-off mood, capped the GBP/USD rally
US equities are trading in the red amidst the market’s narrative that stocks are in overbought territory. Also, a weaker-than-expected Industrial Profits report from China weighed on market sentiment as deflationary pressures persisted.
The latest report from the US Census Bureau revealed that New Home Sales plunged in October due to high mortgage rates, as the US Federal Reserve (Fed) tightened monetary policy by 525 basis points since March 2022. Purchases dropped -5.6% YoY, missing estimates. The data failed to undermine the GBP/USD, which clings to gains due to a risk-off impulse.
Hence, the US Dollar Index, a measure of the buck’s value against a basket of six currencies paired with some of its earlier losses, is up 0.03%, at 103.44.
Meanwhile, the Bank of England Governor Andrew Bailey said getting inflation back to the 2% target will be “hard work,” acknowledging the recent fall from 6.7% to 4.6% is attributed to the drop in energy prices. Bailey emphasized they have to bring inflation down, even though it harms households; higher prices would worsen conditions.
Meanwhile, according to money market futures, the BoE is expected to cut rates by 25 bps in September of next year. Regarding the Fed, traders had fully priced in almost 85 bps of cuts in the next year.
GBP/USD Price Analysis: Technical outlook
From a technical perspective, the pair is neutral to upwards but has lost some steam. If the GBP/USD turns negative and prints a daily close below 1.2600, that would sponsor a leg-down in the major. The first support is at the November 24 daily low of 1.25223, followed by 1.2500. On the other hand, if the pair stays above 1.2600, further upside is expected. Buyers’ reclaiming 1.2700, could test the August 30 high at 1.2746.
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.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.