GBP/USD: Investors holding back

GBP/USD witnessed some intraday selling on Thursday following the collapse on US bond yields and  Fed rate cut speculations which weighed on the USD and helped limit the downside. Investors are likely to refrain from placing any aggressive bets ahead of the UK-EU Brexit negotiations, according to Haresh Menghani from FXStreet

Key quotes

“The coronavirus fears-led brutal selling in equities continued boosting demand for traditional safe-haven assets and dragged the US Treasury bond yields to fresh record lows. This coupled with speculations that the Fed will cut interest rates to offset the impact of a spreading coronavirus exerted some heavy pressure on the greenback.” 

“The incoming Brexit-headlines might continue to play a key role in influencing the GBP price dynamics. Later during the early North-American session, the US economic docket – featuring the release of Personal Income/Spending data, Core PCE Price Index and Chicago PMI – might produce some trading opportunities on the last day of the week.”

“Market participants will keep a close watch on any fresh developments surrounding the coronavirus saga, which remains a key theme in the global financial markets and continue to infuse some volatility in the FX market. 

“The pair, however, seems unlikely to make any big moves as investors might refrain from placing any aggressive bets, rather prefer to wait on the sidelines ahead of the EU-UK trade talks starting Monday.”