GBP/USD marches towards 1.2600 as Fed sets to pause policy-tightening spell


  • GBP/USD is marching towards 1.2600 as a Fed rate-cycle pause would trim Fed-BoE policy divergence.
  • US labor market conditions carry the potential of making inflation persistent.
  • S&P500 futures are showing further losses in early Asia, indicating a risk-off mood.

The GBP/USD pair is approaching the round-level resistance of 1.2600 in the early Tokyo session. The Cable is aiming higher as the Federal Reserve (Fed) is following the language of other central banks. Fed chair Jerome Powell has confirmed that further monetary policy decisions will be data-dependent, which indicates that the central bank has reached an intermediate terminal rate for now.

S&P500 futures are showing further losses in early Asia after a bearish settlement. US equities surrendered their entire gains added in the early New York session amid uncertainty over the further path to be followed by the Fed to tame sticky inflation. Negative market sentiment has faded appeal for risk-sensitive assets.

The US Dollar Index (DXY) is declining towards May 03 low around 101.07 amid neutral guidance from the Fed. Also, the US yields are heavily down amid an increase in demand for US government bonds. The 10-year US Treasury yields have dropped to near 3.36%.

Meanwhile, upbeat US labor market conditions are signaling that a hawkish stance from the Fed would not be over soon as labor shortage could propel inflationary pressures. On Wednesday, the US Automatic Data Processing (ADP) agency reported an addition of fresh 296K jobs in April vs. the estimates of 150K and the former release of 145K.

There is no denying the fact that extreme labor shortage would have been offset by offering higher wages, which carries the potential of making inflation persistent.

On the Pound Sterling front, the Bank of England (BoE) is expected to raise interest rates further as United Kingdom inflation is not ready to leave the double-digit territory despite consistent policy tightening. BoE Governor Andrew Bailey is ready to raise interest rates consecutively for the 12th time. An interest rate hike of 25 bps is anticipated by the market participants.

GBP/USD

Overview
Today last price 1.2573
Today Daily Change 0.0106
Today Daily Change % 0.85
Today daily open 1.2467
 
Trends
Daily SMA20 1.2453
Daily SMA50 1.2267
Daily SMA100 1.2215
Daily SMA200 1.1944
 
Levels
Previous Daily High 1.2512
Previous Daily Low 1.2436
Previous Weekly High 1.2584
Previous Weekly Low 1.2387
Previous Monthly High 1.2584
Previous Monthly Low 1.2275
Daily Fibonacci 38.2% 1.2465
Daily Fibonacci 61.8% 1.2483
Daily Pivot Point S1 1.2431
Daily Pivot Point S2 1.2395
Daily Pivot Point S3 1.2355
Daily Pivot Point R1 1.2508
Daily Pivot Point R2 1.2548
Daily Pivot Point R3 1.2584

 

 

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