- GBP/USD stops two-day losing streak amid the broad USD pullback.
- Risk reshuffle, catalysts doubting the US monetary policy, debt problem seem to have played their role.
- Markit PMIs from the UK and the US will offer intermediate directions.
GBP/USD isn’t left behind, as far as the US dollar’s (USD) latest pullback is concerned, which in turn probes the recent declines, while trading around 1.3085, ahead of the London open on Monday. Traders will now keep eyes on the UK Services PMI for fresh impulse amid broad risk-off.
The USD is likely consolidating the latest gains amid a slew of catalysts that push buyers to re-think on their risk forecasts. This includes Iran/Iraq’s capacity to confront the US and the global leaders’ push to de-escalate the war-like tension.
Also contributing to the greenback’s recent pullback are comments from the US Federal Reserve (Fed) Bank of New York President John Williams and headlines from China’s Global Times (GT). While the Fed policymaker’s support for easy money policy could challenge the likely rate hikes, GT’s point that the US debt problem is out of control seems to have a ground.
On the other hand, the UK PM and the Foreign Secretary Dominic Raab have indirectly shown their support to the US killing of Iranian General Qassem Soleimani. However, Britain stays in support of Germany and France to try to tame the risk of war.
Elsewhere, the UK’s opposition Labour Party will determine the timetable for the election of its next leader on Monday. The lead contender Keir Starmer seems to have accepted the Brexit whereas Jess Phillips suggests she might seek to rejoin EU if Brexit fails.
It should also be noted that the UK PM will meet Ursula von der Leyen, European Commission President on Wednesday and could discuss the Brexit proceedings. However, the Daily Mail suggests that the senior Tory leaders urge Boris Johnson to kick off parallel post-Brexit trade talks with the US to put pressure on the EU and stop Brussels ‘dragging its feet’ over striking a deal by the end of 2020.
While December month’s final readings of the UK Services PMI, expected 49.2 from 49.00 prior, acts as an immediate catalyst, political/Brexit headlines and the US Markit numbers will be worth to watch.
Technical Analysis
An area between 50-day and 21-day SMA, around 120 pips inside 1.3000 and 1.3120 respectively, limits the pair’s short-term moves.
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.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.