- GBP/USD turns lower for the third straight day amid a modest USD uptick.
- The cautious market mood is seen benefitting the safe-haven Greenback.
- Bets for an imminent Fed rate hike pause might continue to cap the buck.
The GBP/USD pair struggles to capitalize on the previous day's goodish rebound of over 70 pips and attracts fresh sellers near the 1.2455-1.2460 region, or the 50-day Simple Moving Average (SMA), on Tuesday. Spot prices turn lower for the third straight day and trade just above the 1.2400 round-figure mark during the first half of the European session.
The prevalent cautious mood around the equity markets lends some support to the safe-haven US Dollar (USD), which, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair. That said, any meaningful upside for the USD seems elusive amid rising bets for an eventual pause in the Federal Reserve's (Fed) policy tightening cycle. In fact, the current market pricing points to a greater chance that the US central bank will leave interest rates unchanged next week.
It is worth recalling that a slew of influential Fed officials last week backed the case for skipping an interest rate hike at the June policy meeting. Adding to this, the disappointing release of the US ISM Services PMI on Monday, which fell to 50.3 in May, signals more cooling in the US economy and offers lesser headroom for the US central bank to keep raising interest rates. This leads to a further decline in the US Treasury bond yields and acts as a headwind for the Greenback.
Apart from this, expectations that the Bank of England (BoE) will be far more aggressive in policy tightening to contain stubbornly high inflation might further contribute to limiting the downside for the GBP/USD pair. This, in turn, suggests that any subsequent decline might still be seen as a buying opportunity and remain limited. In the absence of any relevant market-moving economic releases from the US, the USD price dynamics will continue to play a key role in influencing the major.
Technical levels to watch
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 stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.