|

GBP/USD rebounds from three-week low, eyes mid-1.3400s as Fed concerns weigh on USD

  • GBP/USD regains positive traction at the start of a new week amid broad-based USD selling bias.
  • Concerns about the Fed’s independence drag the USD away from a one-month top set on Friday.
  • Rising geopolitical tensions fail to benefit the safe-haven buck or hinder the pair’s move up.

The GBP/USD pair attracts some buyers near a technically significant 200-day Simple Moving Average (SMA) and recovers slightly from a nearly three-week low, touched during the Asian session on Monday. Spot prices, for now, seem to have snapped a four-day losing streak and currently trade around the 1.3435 region, up 0.20% for the day.

Despite the global flight to safety and reduced bets for more aggressive policy easing by the US Federal Reserve (Fed), renewed concerns about the US central bank's independence weigh on the US Dollar (USD) and benefit the GBP/USD pair. In fact, Fed Chair Jerome Powell said in a statement that the Department of Justice is threatening a criminal indictment against him. Powell added that the threat of criminal charges is a consequence of the Fed on our best assessment of what will serve the public, rather than following the preference of the President.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, is seen extending Friday's retracement slide from its highest level since December 9, touched ahead of the crucial US Nonfarm Payrolls (NFP) report. The headline US NFP showed that the economy added 50K new jobs in December, undershooting market expectations and offsetting a decline in the Unemployment Rate to 4.4%. Nevertheless, the data backs the case for potentially stagnant monetary policy in the first quarter, though it does little to impress the USD bulls.

However, rising bets for two more interest rate cuts by the Bank of England (BoE) in 2026 might hold back traders from placing aggressive bullish bets around the British Pound (GBP) and cap the GBP/USD pair. Traders might also opt to wait for this week's release of the latest US inflation figures – the Consumer Price Index (CPI) and the Producer Price Index (PPI) on Tuesday and Wednesday, respectively. Moreover, the monthly UK GDP report on Thursday would provide some meaningful impetus to the GBP/USD pair during the latter part of the week.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.24%-0.20%-0.16%-0.16%-0.19%-0.20%-0.36%
EUR0.24%0.04%0.06%0.08%0.05%0.01%-0.13%
GBP0.20%-0.04%0.02%0.04%0.00%-0.03%-0.17%
JPY0.16%-0.06%-0.02%0.02%-0.02%-0.05%-0.19%
CAD0.16%-0.08%-0.04%-0.02%-0.03%-0.06%-0.21%
AUD0.19%-0.05%-0.01%0.02%0.03%-0.04%-0.18%
NZD0.20%-0.01%0.03%0.05%0.06%0.04%-0.14%
CHF0.36%0.13%0.17%0.19%0.21%0.18%0.14%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress
The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.