GBP/USD remains poised to break 1.3900 ahead of UK data
- GBP/USD continues to slip down in the early European session.
- A combination of factors weighs on sterling's performance.
- Uptick in US treasury yields underpins the US dollar demand.
The appreciative move in the US dollar keeps GBP/USD under pressure on the last trading day of the week. The pair broke the broader consolidating range of 1.4100-1.4220 on Monday and continued to skid lower.
At the time of writing, GBP/USD trades at 1.3901, down 0.13% for the day.
The US Dollar Index (DXY), which tracks the performance of the US dollar stands higher at 91.92 with 0.05% gains. The greenback moves in tandem with the US 10-year benchmark yields, which read at 1.51%.
Investors digested the Fed hawkish inflation forecast and the timing of the probable two rate hikes. Market participants shrugged off the weaker Initial Jobless Claims data as the growth prospects overshadowed the poor readings.
On the other hand, the sterling remained unfazed by the reports that the extended lockdown could end two weeks earlier on July 5.
On the economic side, UK inflation rose more than expected in May to the highest level since July 2019 and above the Bank of England’s (BOE) target of 2.0%.
In the latest development, the latest Reuters poll of 67 economists showed that the central bank would keep its monetary policy unchanged ahead of next week’s BOE interest rate decision.
Meanwhile, UK relations with the EU worsens over the Northern Ireland protocol. The UK has asked EU to extend the grace period for chilled meat exports, as it will be banned at the end of June under the terms of the NI Brexit agreement. This, in turn, sour the sentiment around the cable.
As for now, investors are closely watching for the UK Retail Sales data to gauge the market sentiment.
GBP/USD additional levels
Author
Rekha Chauhan
Independent Analyst
Rekha Chauhan has been working as a content writer and research analyst in the forex and equity market domain for over two years.
