- GBP/USD extends the recent uptrend to test six-week highs.
- The depressed US dollar underpins the cable amid firmer Treasury yields.
- Softer UK inflation shakes off Nov BOE rate hike bets, Brexit woes loom.
GBP/USD is holding higher ground above 1.3800, sitting at the highest levels in six weeks, as the US dollar licks its wounds amid a mixed market sentiment.
The US dollar is in a bearish consolidative mode across its main peers, extending its week-long correction from yearly tops of 94.56 reached last week, as investors continue to liquidate their long USD positions heading into a potential Fed’s tapering next month.
Further, strong US corporate earnings-induced record run on Wall Street indices add to the weight on the safe-haven dollar, boding well for higher-yielding currencies such as the cable.
Despite the upsurge, the bulls remain cautious amid the relentless rise in the US inflation expectations and Treasury yields. Meanwhile, looming Brexit concerns could also hamper GBP/USD’s run higher.
According to The Guardian, “a new report on trafficking in the UK has warned that Brexit and the Home Office’s new plan for immigration is increasing the risks to trafficking victims.”
Looking ahead, the dynamics in the US dollar and the yields will have a significant bearing on the major, as investors shrugged off an unexpected dip in the UK Consumer Price Index (CPI) in September, which arrived at 3.1% YoY vs. 3.2% expected.
Softer UK inflation doused the Bank of England (BOE) November rate hike expectations and briefly weighed on the pound a day before. Additionally, resurfacing concerns over a rising number of COVID-19 cases in the Kingdom also poses a threat to the pair’s upside.
Attention turns towards the US weekly Jobless Claims release and Fedspeak for fresh incentives on trading cable amid a relatively data-light week.
GBP/USD: Technical levels to consider
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 alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.