|

GBP/USD remains depressed around 100-day SMA on stronger USD, holds above mid-1.2900s

  • GBP/USD edges lower at the start of a new week amid broad-based USD strength.
  • Expectations for a less aggressive Fed policy easing continue to underpin the USD.
  • Bets for more BoE rate cuts weigh on the GBP and exert pressure on the major. 

The GBP/USD pair kicks off the new week on a softer note and trades around the 1.2960-1.2955 region, just below the 100-day Simple Moving Average (SMA) during the Asian session. Spot prices, however, remain within striking distance of the lowest level since August 16, near the 1.2900 mark touched last week and seem vulnerable to prolonging a one-month-old downtrend amid a bullish US Dollar (USD). 

The USD Index (DXY), which tracks the Greenback against a basket of currencies, stands firm near a three-month peak and looks to build on its gains registered over the past four weeks amid bets for a less aggressive easing by the Federal Reserve (Fed). In fact, market participants seem convinced that the US central bank will lower borrowing costs by 25 basis points in November as the incoming US macro data continue to suggest that the economy remains on strong footing. 

The US Census Bureau reported on Friday that Durable Goods Orders in the US decreased by 0.8% in September, slightly better than expectation for a decline of 1%. Additional details of the report showed that new orders excluding transportation increased 0.4% during the reported month. Furthermore, the University of Michigan's Consumer Sentiment Index reached a six-month high of 70.5 in October, better than both the preliminary result and the previous month's reading. 

The data validates the view that the Fed will proceed with modest rate cuts over the year, which, in turn, triggers a fresh leg up in the US Treasury bond yields and continues to underpin the USD. The British Pound (GBP), on the other hand, is undermined by rising bets for more interest rate cuts by the Bank of England (BoE) in November and December, bolstered by a fall in the UK Consumer Price Index to the lowest level since April 2021 and below the central bank's 2% target. 

The aforementioned fundamental backdrop suggests that the path of least resistance for the GBP/USD pair is to the downside. Even from a technical perspective, the recent repeated failures to near the 1.3000 psychological mark support prospects for an extension of the downfall from the 1.3435 area, or the highest level since February 2022 touched last month.

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 Swiss Franc.

 USDEURGBPJPYCADAUDNZDCHF
USD -0.01%0.02%-0.02%0.03%0.00%0.10%0.10%
EUR0.01% 0.14%-0.08%0.04%0.10%0.10%0.14%
GBP-0.02%-0.14% 0.60%0.02%0.01%0.04%0.24%
JPY0.02%0.08%-0.60% 0.12%-0.60%-0.62%-0.34%
CAD-0.03%-0.04%-0.02%-0.12% -0.07%-0.01%0.10%
AUD-0.01%-0.10%-0.01%0.60%0.07% -0.03%0.04%
NZD-0.10%-0.10%-0.04%0.62%0.00%0.03% 0.00%
CHF-0.10%-0.14%-0.24%0.34%-0.10%-0.04%-0.00% 

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 pulls back from monthly high but holds above 0.7000

AUD/USD retreats from the monthly high set earlier this Thursday, sliding back to 0.7000 during the Asian session as a further escalation of tensions in the Middle East undermines the risk-sensitive Aussie. However, recent hawkish comments from RBA officials could support the Australian Dollar. Furthermore, the prevailing US Dollar selling bias, despite Fed hike bets and geopolitical uncertainties, could limit losses for the pair.

USD/JPY declines to a one-week low; eyes trading range support near 157.50 on weaker USD

USD/JPY drops to a one-week low during Thursday’s Asian session, with bears now awaiting a break below multi-week range support near mid-157.00s before placing fresh bets amid a broadly weaker US Dollar. Despite bets for a December Fed rate hike and Middle East jitters, the recent decline in US bond yields keeps USD depressed near a three-week low. Moreover, hawkish BoJ expectations and intervention risks underpin the Japanese Yen, further weighing on the currency pair.

Gold extends fall below $4,100 as Fed hike bets counter USD weakness

Gold weakens further below $4,100, hitting a fresh one-week low as oil-driven inflation risks reinforce Fed hike bets and weigh on the bullion heading into the European session. Meanwhile, falling US bond yields keep the US Dollar depressed near a three-week low despite geopolitical uncertainties. This, however, does little to support the non-yielding bullion, backing the case for further losses.

Cardano: Weak momentum puts ADA recovery at risk

Cardano (ADA) is trading below $0.222 on Thursday after failing to sustain gains above the 50-day Exponential Moving Average near $0.228 the previous day. Weakening derivatives metrics and fading bullish momentum continue to weigh on sentiment, while a break below the 100-day EMA could push ADA lower.

Dow Jones Industrial Average climbs with the AI trade, led by a bank

The Dow Jones Industrial Average got most of its share of Wednesday's artificial intelligence (AI) rally from a bank and a bulldozer maker. The index closed near 52,800, its highest close since early September. SpaceX (SPCX) reported 161% revenue growth and the Nasdaq Composite rose more than 1%, but under price weighting the gains that counted most belonged to Goldman Sachs (GS) and Caterpillar (CAT).

The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.