- GBP/USD sellers eye a break below 1.2000, which would pave the way towards 1.1800.
- Fed’s Daly: 50 or 75 bps hike in September is reasonable; rates will go up and remain on hold until inflation subsidies.
- US jobless claims fall; housing data continues weakening.
The GBP/USD remains defensive after tumbling below the 20 and 50-DMAs on Wednesday, extending its losses for the second straight day. Factors like San Francisco Fed’s Mary Daly pushing back against a “dovish” tilt by the Fed, perceived by market participants on the release of the FOMC minutes on Wednesday, turned sentiment sour. The greenback is staying a comeback, with the US Dollar Index up 0.48%, above the 107.00 threshold.
The GBP/USD is trading at 1.2005, below its opening price, after hitting a daily high at 1.2079 early in the European session.
GBP/USD falls on sentiment shift, with Fed speakers pushing back rate-cuts
Mary Daly, San Francisco Fed’s President, commented that it is too early to declare victory on inflation and said that 50 or 75 bps is reasonable for the September meeting, via CNN. She added that core inflation is still increasing and that the market lacks understanding, but consumers understand that rates won’t go down right after going up.
In the meantime, US Initial Jobless Claims for the week ending on August 13 dropped to 250K, less than 265K estimated by analysts, while the housing market continued to cool down due to further evidence of Federal Reserve rate hikes. Existing Home Sales for July dropped 5.9%, at a rate of 4.8 million units in July, the lowest level since May 2020, when sales hit their lowest point during the Covid-19 lockdowns.
Elsewhere, on Wednesday, the UK reported inflation in July, which cleared the 10% threshold for the first time in 40 years. The Office for National Statistics revealed that the Consumer Price Index (CPI) rose 10.1%, from a year earlier, after recording a 9.4% in June. After the report, money market futures priced in nearly 200 bps of rate hikes, in the BoE rate to 3.75%, by May of 2023.
The GBP/USD is still neutral to downward bias, but central bank monetary policy convergence could lead to range-bound trading. With rates in both countries elevating, growth differences between them will enter into play to dictate the direction of the pair.
GBP/USD Key Technical Levels
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 gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
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.