GBP/USD seems vulnerable near 1.2500 mark, over one-week low amid modest USD strength
- GBP/USD struggles to capitalize on its intraday uptick and meets with a fresh supply on Friday.
- The BoE’s less hawkish tilt overshadows slightly better UK macro data and undermines the GBP.
- The USD climbs to a nearly two-week high and further exerts downward pressure on the major.
The GBP/USD pair attracts fresh sellers following an early uptick to the 1.2540 region on Friday and drops to a one-and-half-week low during the early North American session. Spot prices slip below the 1.2500 psychological mark, with bears now awaiting a break below through the lower end of an ascending trend channel extending from the April swing low before placing fresh bets.
The British Pound continues to be undermined by the Bank of England (BoE) Governor Andrew Bailey's less hawkish comments on Thursday, indicating the possibility of a sharp fall in UK inflation. This, to a larger extent, overshadows mostly in-line UK GDP print for the first quarter of 2023 and the better-than-expected UK Manufacturing/Industrial Production figures for March. Apart from this, some follow-through US Dollar (USD) buying for the second straight day prompts some intraday selling around the GBP/USD pair.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, hits a one-and-half-week high amid fears about a global economic slowdown. The market worries resurfaced following the mixed release of Chinese inflation figures and the US labor market report on Thursday. That said, concerns about the US debt ceiling, along with a generally positive tone around the equity markets, keeps a lid on any further gains for the safe-haven Greenback and lends support to the GBP/USD pair, at least for now.
The USD bulls also seem reluctant amid the uncertainty over the Federal Reserve's (Fed) next policy move. In fact, the US CPI report released earlier this week pointed to signs of easing inflationary pressures, which could allow the US central bank to pause its rate-hiking cycle. Investors, however, remain divided over the possibility of rate cuts later this year. This makes it prudent to wait for strong follow-through selling before positioning for an extension of the GBP/USD pair's pullback from over a one-year high, around the 1.2680 region touched earlier this week.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
