- GBP/USD pulls back from over a two-month high amid a modest pickup in the USD demand.
- The better-than-expected UK GDP reaffirms BoE rate hike bets and helps limit the downside.
- Traders also seem reluctant and prefer to wait for the release of the US Core PCE Price Index.
The GBP/USD pair comes under some selling pressure after touching over a two-month high, around the 1.2420-1.2425 area on Friday and maintains its offered tone through the first half of the European session. The pair is currently placed near the lower end of its daily trading range, around the 1.2370-1.2365 zone, down nearly 0.15% for the day.
A goodish pickup in the US Treasury bond yields helps revive the US Dollar (USD) demand on the last day of the week, which turns out to be a key factor dragging the GBP/USD pair lower. Hopes that a widespread banking crisis might have been averted fueled speculations that the US central bank might move back to its inflation-fighting interest rate hikes. Adding to this, three Fed officials on Thursday backed the case for more rate increases to lower high levels of inflation. This, in turn, acts as a tailwind for the US bond yields and lends some support to the Greenback.
Hence, the market focus will remain glued to the release of the US Core PCE Price Index, the Fed's preferred inflation gauge, due later during the early North American session. Heading into the key data risk, traders seem inclined to lighten their bullish bets around the GBP/USD pair, especially after this week's rally of over 200 pips. That said, the slightly better-than-expected UK GDP print reaffirms expectations for additional rate hikes by the Bank of England (BoE), which, in turn, holds back bearish traders from placing aggressive bets around the major, at least for now.
Apart from this, the prevalent risk-on mood - as depicted by an extension of the recent rally in the equity markets - keeps a lid on any meaningful gains for the safe-haven buck and contributes to limiting the downside for the GBP/USD pair. This makes it prudent to wait for strong follow-through selling before confirming that the upward trajectory witnessed since the first half of the current month has run out of steam and positioning for any meaningful depreciating move. Nevertheless, spot prices remain on track to end in positive territory for the sixth successive week.
From a technical perspective GBP/USD appears to have reached a make-or-break level at around 1.2375 at the upper borderline of a broad sideways range that has unfolded since the start of the year. If the market's ranging mode extends, the pair may pivot at the current level and then begin falling back down towards the range lows in the 1.18s. Currently it is too early to say for sure whether it will reverse and there are no technical indications of a reversal, such as a bearish Japanese candlestick pattern or overbought RSI. If the pair pushes out above the highs of the range the move will need to be strong to suggest an extension higher. The pair has reached an important inflection point on the chart and traders should monitor developments closely over the next few days for a steer on GBP/USD's future course.
Technical levels to watch
|Today last price||1.2374|
|Today Daily Change||-0.0014|
|Today Daily Change %||-0.11|
|Today daily open||1.2388|
|Previous Daily High||1.2393|
|Previous Daily Low||1.2294|
|Previous Weekly High||1.2344|
|Previous Weekly Low||1.2167|
|Previous Monthly High||1.2402|
|Previous Monthly Low||1.1915|
|Daily Fibonacci 38.2%||1.2355|
|Daily Fibonacci 61.8%||1.2332|
|Daily Pivot Point S1||1.2324|
|Daily Pivot Point S2||1.2259|
|Daily Pivot Point S3||1.2225|
|Daily Pivot Point R1||1.2423|
|Daily Pivot Point R2||1.2458|
|Daily Pivot Point R3||1.2522|
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD drops toward 1.0700 after US jobs report
EUR/USD came under renewed bearish pressure in the second half of the day on Friday and declined toward 1.0700. Stronger-than-expected Nonfarm Payrolls (NFP) data helps the US Dollar gather strength ahead of the weekend and forces the pair to stay on the back foot.
GBP/USD extends slide below 1.2450 amid a stronger USD
GBP/USD dropped further and hit fresh daily lows below 1.2450 amid a stronger US dollar. The Greenback remains firm following the release of the US May jobs report. Despite losing almost 100 pips on Friday, GBP/USD is still on track for a weekly gain.
Gold falls below $1,960 as US yields rebound after US jobs data
Gold price turned south and declined below $1,960 on Friday. After the data from the US revealed that Nonfarm Payrolls rose 339,000 in May, the benchmark 10-year US Treasury bond yield gained more than 2% and recovered toward 3.7%, weighing heavily on XAU/USD.
Cardano price coils up for a 15% rally as 6.61 million ADA net flow value comes in
Cardano price appears to be ready to finally break out from the consolidation after flipping above a crucial roadblock. The optimism comes as the ADA token recorded a massive spike in large transactions nearing 35,000 in 48 hours.
Week ahead – RBA and BoC to hold rates but might be tempted to hike
Policy decisions from the RBA and the Bank of Canada will be taking centre stage next week amid an otherwise light agenda. In the US, the ISM services PMI will be the only top-tier release and now that Congress has averted a default by suspending the debt ceiling.