GBPUSD retreats to 1.1500 despite UK’s political optimism, US inflation, British GDP eyed
- GBPUSD seesaws near a one-week high while struggling to defend the previous two-day uptrend.
- UK PM Sunak to strike LNG deal with the US, Chancellor Hunt could announce tax raid on inheritance.
- Hopes of Fed’s pivot weighed on the US dollar ahead of the key inflation data.
- UK’s Q3 GDP, fiscal policy announcements will also be important for near-term directions.
GBPUSD struggles to extend the two-day uptrend during Tuesday’s Asian session, easing back to 1.1505, as bulls take a breather amid a light calendar. In doing so, the Cable pair fails to cheer the upbeat news from the UK while waiting for the week’s key events.
Rishi Sunak is poised to announce a major gas deal with America after the Cop27 climate change summit, The Telegraph can disclose. “Talks about the “energy security partnership” are in their final stages, with the US planning to sell billions of cubic meters of Liquefied Natural Gas (LNG) to Britain over the coming year,” the news adds.
The reason for the GBPUSD buyer’s retreat could be linked to another news suggesting that the UK Chancellor Jeremy Hunt is set to announce a new tax raid on inheritance, per the UK Telegraph. The news also mentioned that Chancellor Hunt and Prime Minister (PM) Rishi Sunak are understood to have agreed to freeze the threshold above which people must pay tax for another two years.
Elsewhere, recently mixed comments from the US Federal Reserve (Fed) policymakers, suggesting a halt in the strong rate hike trajectory, especially after Friday’s mixed US jobs report, appeared to have drowned the US dollar in the last two days. On the same line could be the expectations from the US Midterm Elections suggesting more support for easy policies as the latest polls hint at the Republican’s victory in at least one house.
Against this backdrop, Wall Street closed with gains and the US Treasury yields were firmer too. However, the US Dollar Index (DXY) remained pressured.
Looking forward, there are no major data from the UK and the US to be released before Thursday’s key US Consumer Price Index (CPI) for October and the British Gross Domestic Product (GDP) for the third quarter (Q3), up for publishing on Friday. While fears of the UK’s economic pain could keep the bears hopeful, downbeat US inflation numbers may help the DXY bears to extend their latest ruling, which in turn could favor the GBPUSD bulls. Additionally, the UK’s fiscal policy announcements, up for November 17, appear the key for the pair buyers to watch amid high hopes from the new government.
Technical analysis
GBPUSD bulls will have a tough time ahead as the three-month-old resistance line and the 100-DMA, respectively near 1.1555 and 1.1680, stand tall to challenge the Cable pair’s further upside.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
