- GBP/USD oscillates in a range below the 1.2600 mark through the early European session.
- Aggressive Fed rate hike bets continue underpinning the USD and acting as a headwind.
- The downside remains cushioned ahead of the key FOMC/BoE monetary policy meetings.
The GBP/USD pair has recovered its modest intraday losses and was last seen trading in neutral territory, around the 1.2575-1.2580 region during the early European session.
The pair struggled to capitalize on Friday's strong recovery move from its lowest level since July 2020 and edged lower on the first day of a new week amid the emergence of fresh US dollar buying. The prospects for a more aggressive policy tightening by the Fed assisted the greenback to regain positive traction and inch back closer to the multi-year peak touched last week.
In fact, the markets expect the US central bank to hike interest rates at a faster pace and ultimately lift the benchmark rates to around 3.0% by the end of the year to combat stubbornly high inflation. This was reinforced by elevated US Treasury bond yields, which, in turn, continued acting as a tailwind for the greenback and exerted some downward pressure on the GBP/USD pair.
On the other hand, the British pound was undermined by signs that the UK economy is under stress from the soaring cost of living. Weak UK Retail Sales figures released last month highlighted that high inflation might have already started taking its toll on consumer spending. This forced investors to scale back expectations for any further rate hikes from the Bank of England.
Despite these negative factors, downside remains cushioned as investors seem reluctant to place aggressive bets ahead of this week's key central bank event risks. The Fed is scheduled to announce its decision at the end of a two-day policy meeting on Wednesday and is anticipated to hike rates by 50 bps. This will be followed by the BoE policy update on Thursday.
Apart from this, important macro data scheduled at the beginning of a new month, including the closely watched US monthly jobs report, or NFP, on Friday will help determine the near-term trajectory. In the meantime, traders will take cues from the US ISM Manufacturing PMI, which might influence the USD and provide some impetus to the GBP/USD pair later during the North American session.
Technical levels to watch
|Today last price||1.2579|
|Today Daily Change||0.0007|
|Today Daily Change %||0.06|
|Today daily open||1.2572|
|Previous Daily High||1.2615|
|Previous Daily Low||1.245|
|Previous Weekly High||1.2842|
|Previous Weekly Low||1.2411|
|Previous Monthly High||1.3167|
|Previous Monthly Low||1.2411|
|Daily Fibonacci 38.2%||1.2552|
|Daily Fibonacci 61.8%||1.2513|
|Daily Pivot Point S1||1.2477|
|Daily Pivot Point S2||1.2381|
|Daily Pivot Point S3||1.2312|
|Daily Pivot Point R1||1.2641|
|Daily Pivot Point R2||1.271|
|Daily Pivot Point R3||1.2805|
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.