- GBP/USD has dropped after the conclusion of the short-lived pullback to near 1.1976 amid a risk-off mood.
- Hawkish commentary from Fed policymakers aims to bring US Treasury yields back to life.
- The UK economy is expected to deliver negative GDP growth for four consecutive quarters.
The GBP/USD pair has witnessed selling pressure around 1.1976 in the Tokyo session. The short-lived recovery in the Cable from the cushion of 1.1940 has been terminated as hawkish commentaries from Federal Reserve (Fed) policymakers have strengthened the risk aversion theme.
The US Dollar Index (DXY) has resumed its upside journey after a corrective move to near 106.60. S&P500 futures have rebounded marginally in the Asian session, but the road to reversal is still far. Meanwhile, the 10-year US Treasury yields have recovered to near 3.69%.
The alpha generated by US Treasury bonds has resurfaced as investors believe that the interest rate hike deceleration doesn’t resemble a pause in further policy tightening. The headline United Stated inflation is at 7.7%, far from the targeted rate of 2%, and required a heap of effort from the Federal Reserve (Fed) policymakers.
Richmond Fed Bank President Thomas Barkin said on Monday that he supports smaller interest-rate hikes ahead as the central bank moves to bring down too-high inflation, as reported by Reuters.
Also, Cleveland Fed Bank President Loretta Mester believes that the Federal Reserve is not near to a pause in a rate hike, as reported by Financial Times. She added that more good inflation reports and more signs of moderation are required before building an action plan of pausing rate hikes.
The US Gross Domestic Product (GDP) data will be keenly watched. The preliminary GDP for the third quarter is seen unchanged at 2.6%. As the Fed is dedicated to bringing price stability, a slowdown in the growth rate is highly recommended. A spell of improvement in the growth rates will continue to keep reign into inflation as solid GDP indicates robust demand from individuals, which doesn’t lead to a decline in price growth.
On the Pound Sterling front, Economists at Danske Bank have confirmed that the United Kingdom has entered a recession. They expect negative GDP growth for four consecutive quarters and growth not to return until the fourth quarter of CY2023.
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
AUD/USD hovers around 0.6500 amid light trading, ahead of US GDP
AUD/USD is trading close to 0.6500 in Asian trading on Thursday, lacking a clear directional impetus amid an Anzac Day holiday in Australia. Meanwhile, traders stay cautious due ti risk-aversion and ahead of the key US Q1 GDP release.
USD/JPY finds its highest bids since 1990, near 155.50
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, testing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming Japanese intervention risks. Focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Meta Platforms Earnings: META sinks 10% on lower Q2 revenue guidance Premium
This must be "opposites" week. While Doppelganger Tesla rode horrible misses on Tuesday to a double-digit rally, Meta Platforms produced impressive beats above Wall Street consensus after the close on Wednesday, only to watch the share price collapse by nearly 10%.