- GBP/USD picks up bids to refresh intraday high, confronts descending resistance line from April 21.
- Brexit headlines join inactive markets, amid off in Japan and China, to test the latest recovery moves.
- US Factory Orders may offer fresh impulse but risk catalysts are more important for clear directions.
- Bears stay hopeful as BOE faces a bumpy road to policy tightening compared to Fed.
GBPUSD tracks other major currencies while printing mild gains versus the US dollar during early Tuesday morning in Europe. Even so, the cautious mood ahead of the key central bank meeting and holidays in China and Japan challenges the cable buyers around nearby hurdle surrounding 1.2530 at the latest.
The US Dollar Index (DXY) drops 0.13% to 103.47 as an off in Japan resulting in inaction in the Asian bond market, which in turn leaves the benchmark Treasury yields unchanged. Given the US 10-year Treasury yields’ pullback from the highest level since late 2018 by the end of Monday, after refreshing the multi-day high, USD traders took the dormant bond market as an opportunity to pare recent gains.
Also likely to have weighed on the DXY prices could be the recently easy US data. The US ISM Manufacturing PMI for April eased to 55.4 versus 57.6 market forecast and 57.1 prior readings while S&P Manufacturing PMI also softened to 59.2 from 59.7 expected and prior.
Even so, hopes of a 0.5% rate hike from the Fed and economic challenges for the UK policymakers, including those emanating from Brexit and the Russia-Ukraine crisis, keep GBP/USD sellers hopeful.
Brexit has always been a pain for the UK policymakers and the latest deadlock resulted in Brit expats’ inability to drive vehicles in Spain. “British migrants living in Spain are facing driving bans after the Government failed to reach a post-Brexit deal on licences,” said Metro news.
Elsewhere, Germany steps back from the previous agitation to ban Russian oil imports, which in turn fuels the geopolitical tension surrounding Kyiv and underpins the US dollar’s safe-haven demand. Also favoring the rush for risk safety are the stricter activity lockdowns in Beijing due to covid resurgence.
That being said, GBP/USD recovery remains doubtful until the Fed-BOE duet completes. For the day, the US Factory Orders for March, expected at 1.1% versus -0.5% prior, will decorate the calendar.
Technical analysis
Although RSI conditions hint at an extended recovery move towards the 10-DMA level of 1.2685, a daily closing beyond 1.2530 becomes necessary for short-term buyers to keep reins. Even so, the previous support line from December 2021, near 1.2910 by the press time, acts as the key hurdle to the north.
On the contrary, the recently flashed multi-day bottom around 1.2410 appears a tough nut to crack for the GBPUSD bears.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.