- GBP/USD witnessed some selling on Friday amid the emergence of fresh USD buying.
- Rising Fed rate hike bets was seen as a key factor that acted as a tailwind for the USD.
- Investors look forward to the US monthly jobs report for a fresh directional impetus.
The GBP/USD pair edged lower during the early European session and dropped to a fresh daily low, around the 1.3275 region in the last hour.
The pair struggled to capitalize on this week's recovery from sub-1.3200 levels or the YTD low set on Tuesday and has been oscillating in a narrow trading band over the past three trading sessions. The UK-EU impasse over the Northern Ireland Protocol and the worsening row over the post-Brexit fishing rights between France and Britain turned out to be a key factor that acted as a headwind for the British pound. This, along with the emergence of some US dollar buying, prompted some selling around the GBP/USD pair on the last day of the week.
The greenback continues to draw support from firming expectations that the Fed would tighten its monetary policy sooner rather than later to contain stubbornly high inflation. In fact, the money markets started pricing in the possibility of liftoff in June 2022 in reaction to Fed Chair Jerome Powell's hawkish comments earlier this week. In his congressional testimony, Powell said that the Fed is likely to speed up the tapering of its asset purchases. Several FOMC members also backed the case for a faster pace of rolling back the pandemic-era stimulus.
That said, mixed performance in the equity markets could hold back traders from placing aggressive bullish bets around the safe-haven greenback. The market risk sentiment stabilized a bit amid easing fears about the economic impact of the new and possible vaccine-resistant Omicron variant of the coronavirus. This, along with the passage of a bill to fund the US government through mid-February, further boosted investors' confidence. Traders might also prefer to move on the sidelines ahead of Friday's release of the closely-watched US monthly jobs data.
The popularly known NFP report will play a key role in influencing the USD price dynamics and provide some meaningful impetus to the GBP/USD pair later during the early North American session. Apart from this, trades will further take cues from developments surrounding the coronavirus saga and Brexit-related headlines to grab some short-term opportunities around 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 holds positive ground above 1.0750 ahead of Eurozone PMI, PPI data
EUR/USD trades in positive territory for the fourth consecutive day near 1.0765 during the early Monday. The softer US Dollar provides some support to the major pair. Traders await the HCOB Purchasing Managers’ Index (PMI) data from Germany and the Eurozone, along with the Eurozone PPI.
GBP/USD rises to near 1.2550 due to dovish sentiment surrounding Fed
GBP/USD continues its winning streak for the fourth consecutive day, trading around 1.2550 during the Asian trading hours on Monday. The appreciation of the pair could be attributed to the recalibrated expectations for the Fed's interest rate cuts in 2024 following the release of lower-than-expected US jobs data.
Gold price rebounds on downbeat NFP data, softer US Dollar
Gold price snaps the two-day losing streak during the Asian session on Monday. The weaker-than-expected US employment reports have boosted the odds of a September rate cut from the US Federal Reserve. This, in turn, has dragged the US Dollar lower and lifted the USD-denominated gold.
Bitcoin Cash could become a Cardano partnerchain as 66% of 11.3K voters say “Aye”
Bitcoin Cash is the current mania in the Cardano ecosystem following a proposal by the network’s executive inviting the public to vote on X, about a possible integration.
Week ahead: BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.