- GBP/USD edges higher on Friday and draws support from a combination of factors.
- Stronger UK wage growth data underpins the British Pound and acts as a tailwind.
- Subdued USD demand offers additional support, though the upside remains capped.
- Investors now await the key CPI reports from the US and the UK ahead of the FOMC.
The GBP/USD pair struggles to capitalize on its modest intraday uptick and retreats a few pips from the daily top, around the 1.2300 mark touched during the early European session. The pair is currently placed just above the mid-1.2200s and remains well within a familiar trading range held over the past week or so.
The British Pound gets a minor lift after stronger UK wage growth data revived bets for a supersized 75 bps rate hike by the Bank of England. In fact, the UK Office for National Statistics (ONS) reported that Average Weekly Earnings, excluding bonuses, rose by +6.1% during the three months to October as compared to +5.8% in the previous month. Moreover, the gauge including bonuses edged higher to 6.1% in October from 6.0% in September, suggesting that upward pressure on inflation coming from rising salaries might continue to grow.
This, to a larger extent, helps offset an uptick in the unemployment rate and an unexpected rise in the number of people claiming unemployment-related benefits. Apart from this, subdued US Dollar demand turns out to be another factor offering additional support to the GBP/USD pair. A generally positive mood around the equity markets, bolstered by the optimism over the easing of COVID-19 curbs in China, keeps the USD bulls on the defensive. That said, the uncertainty over the Fed's rate hike path holds back traders from placing aggressive bets.
Market participants seem convinced that the Fed will slow the pace of its policy tightening and have been pricing in a relatively smaller 50 bps lift-off in December. That said, the incoming positive US economic data has been fueling speculations that the Fed might lift rates more than projected. Hence, the focus will remain on the outcome of a two-day FOMC policy meeting, scheduled to be announced on Wednesday. In the meantime, traders will take cues from the latest US consumer inflation figures, due later during the early North American session on Tuesday.
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 retreats toward 1.0800 after US data
EUR/USD has lost its traction and declined toward 1.0800 with the initial reaction to the upbeat consumer confidence data from the US. Meanwhile, Wall Street's negative opening seems to be helping the US Dollar find its footing and making it hard for the pair to stretch higher.
GBP/USD clings to modest daily gains near 1.2300
GBP/USD has retreated to the 1.2300 area in the early American session with the US Dollar finding demand amid the negative shift witnessed in risk mood. The data from the US revealed that the CB Consumer Confidence Index rose modestly in March.
Gold pulls away from session highs, holds near $1,960
After having climbed toward $1,970 earlier in the day, Gold price erased a portion of its daily gains and retreated to the $1,960 area. The benchmark 10-year US Treasury bond yield stays in positive territory above 3.5%, not allowing XAU/USD to gather further bullish momentum.
Ethereum (ETH) options traders turn bearish ahead of the token unlock
Ethereum is holding steady above the $1,700 level despite slight bearish sentiment among options traders. Analysts have noted a rise in open interest in Ethereum, as co-founder Lubin assures that the altcoin is not a security.
S&P 500: With banking crisis in rear view, market pushes index closer to 4,000
The S&P 500 on Monday moved ahead cautiously without much fanfare after the US government agreed to sell $72 billion worth of Silicon Valley Bank assets to First Citizens Bank (FCNCA).