GBP/USD scales above 1.2170 as risk-off fades, BOE policy in focus
- GBP/USD has climbed to 1.2177 as risk-on impulse returns confidently to the FX domain.
- The DXY is likely to remain uncertain ahead of the US NFP data.
- Investors are hoping for a 25 bps rate hike by the BOE.
The GBP/USD pair has surpassed the immediate hurdle of 1.2172 as investors have ignored the US-China tensions and have returned to risk-perceived currencies. The cable picked significant bids below 1.2140 and displayed a vertical upside move. The asset has printed an intraday high of 1.2175 and is likely to extend gains.
Earlier, the risk-sensitive currencies were underperforming as escalating Sino-US tensions improved the safe-haven appeal. Also, a pullback move in the DXY was highly expected. The DXY is likely to entertain short-term investors ahead of the US Nonfarm Payrolls (NFP) data, which is due on Friday.
The employment data is likely to remain downbeat as the market participants are expecting a downward shift in the employment generation to 250k than the prior release of 372k. Also, the Unemployment Rate is expected to remain unchanged at 3.6%. Investors should be aware of the fact that the US economy is operating on full-employment levels and a prolonged increment in job creation at an increasing rate cannot sustain. However, a satisfactory jump should be expected.
On the UK front, investors are hoping for a rate hike by the Bank of England (BOE) in its monetary policy meeting on Thursday. BOE Governor Andrew Bailey is expected to hike the interest rate by 25 basis points (bps). Considering the inflation rate at 9.4%, a rate hike by 25 bps is unable to offset price pressures. However, the downbeat economic indicators and political instability are restricting the BOE to go all in unhesitatingly.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
