- GBP/USD attracts some buying on the last day of the week amid a modest USD weakness.
- A positive risk tone weighs on the buck, though hawkish Fed expectations help limit losses.
- Investors now look to the US PCE data to determine the near-term trajectory for the major.
The GBP/USD pair gains some positive traction on the last day of the week and snaps a two-day losing streak to over a three-week low touched on Thursday. Spot prices stick to intraday gains, around the 1.2055-1.2060 area through the first half of the European session, though struggle to move back above the very important 200-day SMA.
The US Dollar comes under some renewed selling pressure and turns out to be a key factor pushing the GBP/USD pair higher. A modest recovery in the equity markets is seen undermining the safe-haven buck, though looming recession risks could help limit the downside. Apart from this, speculations that the Fed will stick to its policy-tightening cycle support prospects for the emergence of some dip-buying around the USD.
Worries about the economic headwinds stemming from a surge in new COVID-19 cases in China, along with geopolitical risk, might keep a lid on any optimism in the markets. In fact, Russia said on Wednesday that the continued arms supplies by Western allies to Ukraine would lead to a deepening of the ongoing conflict. Furthermore, North Korea reportedly fired a ballistic missile towards the sea off its east coast on Friday.
Meanwhile, the upbeat US macro data released on Thursday pointed to a still-tight labour market and resilient economy. This could allow the Federal Reserve to continue raising borrowing costs to tame inflation, which acts as a tailwind for the US Treasury bond yields. The USD bulls, however, prefer to wait for the release of the US Personal Consumption Expenditure (PCE) data later during the early North American session.
The Core PCE Price Index, the Fed's preferred inflation gauge, will provide fresh cues on inflation and influence the US central bank's rate-hike path. This, in turn, will play a key role in driving the USD demand in the near term and help investors to determine the next leg of a directional move for the GBP/USD pair.
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 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.