GBP/USD pares US inflation-led gains near 1.2200, UK ministers’ meeting with energy firms, GDP eyed

GBP/USD remains pressured around 1.2200 heading into Thursday’s London open, having witnessed the most significant daily jump in two months the previous day.

The US dollar’s weakness post-inflation release pleased the Cable pair buyers on Wednesday. However, the quote’s latest weakness could be linked to the mixed comments from the Fed policymakers and the cautious mood ahead of the critical meeting between the UK ministers and energy companies. Also teasing the bears are the China-linked news surrounding the Sino-American trade war, covid and Taiwan.

“Government ministers are to meet energy companies on Thursday as the Treasury considers toughening the 25% levy on the profits of North Sea oil and gas operators announced in May,” Said The Guardian. The news adds, “Chancellor Nadhim Zahawi and business secretary Kwasi Kwarteng will meet energy bosses to discuss soaring energy bills for households, when oil and gas companies are raking in billions of pounds in profits.”

Elsewhere, Mary Daly, President of the San Francisco Fed recently hesitated to declare victory over inflation, even after the US Consumer Price Index (CPI) declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior. In doing so, the policymakers joined the likes of Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans. Previously, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

Talking about China-related news, Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in the wake of Taiwan's response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair. Furthermore, China Customs’ latest rejection of US meat from a specific producer and comments from the Taiwan Foreign Ministry suggests rejection of China’s motto of 'One country, Two systems’.

Amid these plays, S&P 500 Futures print mild gains near 4,220 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day.

The outcome of the British Ministers’ meeting with energy firms will be important for the GBP/USD traders. Also crucial to track are the details surrounding the US Jobless Claims and the monthly Producer Price Index (PPI) for July. Furthermore, UK’s Q2 Gross Domestic Product (GDP) up for publishing on Friday, will also be important to watch for fresh impulses.

Technical analysis

A downward trend line from June 16 restricts immediate GBP/USD upside around 1.2270. However, bears need validation from the 21-DMA support surrounding 1.2070 to retake control. That said, RSI (14) and MACD signals keep buyers hopeful.