- GBP/USD attracts some buying during the Asian session, albeit lacks follow-through.
- The USD consolidates its recent gains to a six-week high and lends support to the pair.
- Bets for one more rate hike by the Fed in 2023 to act as a tailwind for the Greenback.
- The BoE's signal that the rate-hiking cycle is nearing the end should cap the major.
The GBP/USD pair edges higher during the Asian session on Friday and moves away from a three-month high, around the 1.2445 region touched the previous day. Spot prices, however, remain below the 1.2500 psychological mark and lack bullish conviction, warranting some caution before positioning for any meaningful appreciating move.
A modest pullback in the US Treasury bond yields, along with signs of stability in the equity markets, hold back traders from placing fresh bullish bets around the safe-haven US Dollar (USD), especially after the recent rally to its highest level since March. This turns out to be a key factor lending some support to the GBP/USD pair. The downside for the USD, however, seems cushioned in the wake of growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer.
Moreover, the markets are still pricing in the possibility of one more 25 bps lift-off by the end of this year. The bets were reaffirmed by the incoming stronger-than-expected US macro data, including the Weekly Jobless Claims on Thursday. The hawkish outlook should act as a tailwind for the US bond yields and the Greenback. This, along with expectations that the Bank of England (BoE) is nearing the end of its policy tightening cycle, could weigh on the British Pound and cap the GBP/USD pair.
In fact, BoE Governor Andrew Bailey told lawmakers on Wednesday that the central bank is much nearer to ending its run of rate increases, though warned that borrowing costs might still have further to rise because of stubbornly high inflation. In the absence of any relevant market-moving economic releases, either from the UK or the US, the fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the GBP/USD pair has formed a near-term bottom.
Technical levels to watch
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 trims some gains, recedes to 1.1350
Despite losing some upside momentium, EUR/USD keeps the firm tone around the mid-1.1300s on Thursday, buoyed by renewed US Dollar weakness as investors grappled with the continued stalemate in US–China trade negotiations.
GBP/USD puts the 1.3300 level to the test
GBP/USD hovers around the 1.3300 area on Thursday, supported by a broad rebound in risk-sensitive assets, renewed weakness in the Greenback and lingering uncertainty over US–China trade talks.
Gold sticks to the bullish stance near $3,330
On Thursday, gold regained lost ground after two consecutive days of declines, with XAU/USD climbing back toward $3,300 per troy ounce following an earlier rally to roughly $3,370. The metal drew safe-haven buying as renewed fears of a US–China trade flare-up weighed on broader markets.
Bitcoin Price corrects as increased profit-taking offsets positive market sentiment
Bitcoin (BTC) is facing a slight correction, trading around $92,000 at the time of writing on Thursday after rallying 8.55% so far this week. Institutional demand remained strong as US spot Exchange Traded Funds (ETFs) recorded an inflow of $916.91 million on Wednesday.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.