- GBP/USD has rebounded firmly from 1.2320 amid hopes of a pause in the policy-tightening spell by the Fed.
- The deviation in proposed budget spending by the White House to Republican leaders has narrowed to $70 billion from original proposal of $1 trillion.
- A rebound in retail demand could fuel inflationary pressures and create more troubles for the BoE.
The GBP/USD pair has shown a recovery move after building a base around 1.2320 in the Tokyo session. The Cable is expected to extend recovery further as the US Dollar Index (DXY) has dropped further below 104.10 amid hopes of a pause in the policy-tightening spell by the Federal Reserve (Fed).
S&P500 futures have posted decent losses in early Asia as investors are getting cautious due to unresolved US borrowing cap issues. The deviation in proposed budget spending by the White House to Republican leaders has narrowed to $70 billion from the original proposal of $1 trillion. Meanwhile, House of Representatives Kevin McCarthy cited that his team is working on reaching a bipartisan.
However, US Treasury Secretary Janet Yellen is consistently warning that the Federal government will be out of funds by June 01 and could make default in some obligated payments.
The USD Index is looking to extend its downside journey towards 104.00 as a pause in a rate-hiking spell by the Fed would trim interest rate divergence with other central banks. Richmond Fed Bank President Thomas Barkin said on Thursday that the US labor market remains tight and added noted that some businesses are still saying that they need to raise prices, per Reuters. However, he added that higher interest rates and tight credit conditions by US regional banks have impacted heavily on demand.
On the Pound Sterling front, investors are awaiting the release of the United Kingdom Retail Sales data (April). As per the preliminary report, monthly Retail Sales are seen expanding by 0.3% against a contraction of 0.9% reported last month. While annual Retail Sales are expected to contract by 2.8% vs. a contraction of 3.1%. A rebound in retail demand could fuel inflationary pressures and create more troubles for the Bank of England (BoE).
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.