Tuesday, March 21, 2023

GBP/USD closed intraday losses, trading above 1.1950 before US PMI.

  • GBP/USD saw some selling on Friday amid fresh buying in the dollar.
  • Bearish fears weighed on investor sentiment and the safe-haven dollar benefited.
  • The Bank of England rate hike by 50 basis points offset mixed UK data and continues to provide some support.

couple GBP/USD Struggled to take advantage of an overnight bounce below 1.1900 or from several-day lows and attracted fresh selling on the last day of the week. However, the pair managed to rebound a few pips from the daily low and was last seen in the US session making minor losses just above 1.1950.

The recent bullish move in equity markets seems to have come to an end amid rising fears of a possible global slowdown. Fears were fueled by the disappointing release of the Eurozone PMI, which continued to dent investor sentiment. A cautious mood helped the safe-haven US dollar gain positive traction, which, in turn, was seen as a major downside pressure on GBP/USD.

Sterling was further hit by UK retail sales data, which was down 0.1% in June. However, the decline was lower than expected by 0.3%, which offered some support for the British pound, as well as slightly better than the UK PMI. In addition, the increased likelihood of the Bank of England raising interest rates by 50 basis points in August helped the GBP/USD pair to find some support from the 1.1915 zone.

It is worth remembering that Bank of England Governor Andrew Bailey said earlier this week that the central bank makes it a top priority to bring inflation back to its 2% target. Bailey explicitly stated that at the next meeting the options on the table would increase by 50 basis points. It makes sense to wait for a strong selloff before confirming that GBP/USD’s recent rebound from the 1.1760 area has run its course.

Market participants are now awaiting the US economic calendar, in which the PMI data for July will be released. This, along with general market risk sentiment, will affect USD price dynamics and provide some momentum to the GBP/USD pair. However, spot prices are on track to post modest weekly gains and break a three-week losing streak, although Britain’s political crisis and Brexit could continue to act as headwinds.

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
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