- GBP/USD off two-week lows, downside risks prevail below 1.3700.
- Brexit concerns escalate amid the UK-French fishing row, weighs on the pound.
- USD holds firmer amid hawkish Fed’s expectations, BOE likely to hint at rate hikes.
GBP/USD is under pressure below 1.3700, trying to find its feet after Friday’s severe blow. The bears retain control amid a broadly stronger US dollar and looming Brexit risks.
The US dollar index continues to hold the higher ground near two-week tops amid rising expectations of a sooner-than-expected Fed rate hike, as Friday’s PCE Price Index accelerated to 4.4% YoY in September vs. 4.2% previous.
The same is being reflected in the Treasury yields, with the benchmark 10-year rates up 1.50% so far. This week, markets have fully priced in that the Fed will announce a tapering of its bond-buying.
Brexit in focus
Meanwhile, growing Brexit concerns will continue to undermine the British currency amid an escalating row over fishing rights between the UK and France. Over the weekend, French President Emmanuel Macron said the row was “a test” of the UK’s “credibility”, in a Financial Times (FT) interview.
Separately, the head of the French ports of Calais and Boulogne, Jean-Marc Puissesseau warned, “It will be a drama, it will be a disaster.”
Maroš Šefčovič, Vice-President of the European Commission in charge of Interinstitutional Relations and Foresight, said, “he is concerned the (UK) Government will refuse to engage with (Northern Ireland) proposals put forward by Brussels.”
Gear up for a big week, the pair will likely remain confined within a narrow, with all eyes on the Fed and BOE policy decision while Friday’s NFP release will also hog the limelight. In the meantime, traders will take cues from the UK Final Manufacturing PMI and the US ISM Manufacturing index.
GBP/USD: Technical levels to consider
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 below 1.0700 after US data
EUR/USD stays in a consolidation phase below 1.0700 in the early American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold trades on the back foot, manages to hold above $2,300
Gold struggles to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to reverse its direction.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.