- GBP/USD attracts buyers for the second day in a row and is supported by a weaker USD.
- A further pullback in US bond yields and a positive risk tone weaken the safe-haven dollar.
- Expectations of further Fed rate hikes should act as a tailwind for US bond yields and the dollar.
GBP/USD is gaining ground for the second day in a row on Tuesday, recovering from its lowest level since June 13, around the 1.2550-1.2545 zone touched last week. The pair is trading around the 1.2620-1.2625 zone at the start of the European session, up more than 0.15% on the day, although it remains below the SMA support breakout point. 100 days.
The pullback in US Treasury yields pushes the dollar away from a nearly three-month high reached last week, which in turn is seen as a key factor driving GBP/USD higher. Apart from this, the generally positive risk tone, bolstered by new measures implemented by China over the weekend to lure investors back into its battered stock markets, further undermines the safe-haven dollar. Elsewhere, the British Pound (GBP) is supported by Bank of England (BoE) Deputy Governor Ben Broadbent’s remarks on Saturday that policy rates would have to remain in tight territory for some time. .
That said, the possibility of further interest rate hikes from the Federal Reserve (Fed) should act as a tailwind for US bond yields and help limit any significant decline in the dollar, at least for now. . Indeed, Fed Chairman Jerome Powell said on Friday that inflation remains too high and the central bank is willing to continue raising rates to rein in stubbornly high prices. Also, a surprisingly resilient US economy could force the Fed to keep interest rates higher for longer. Expectations had last week pushed the yield on the benchmark 10-year US government bond to its highest level since November 2007, favoring dollar bulls.
Apart from this, the growing acceptance that the Bank of England (BoE) will pause its rate hike cycle after the widely anticipated 25 basis point hike at the September meeting could further help constrain the GBP. /USD. Therefore, it will be prudent to wait for strong buying before confirming that the recent bearish run of the last six weeks is over and positioning for any significant appreciation move. At the start of today’s American session, the US economic agenda will include the release of the Conference Board’s consumer confidence index and JOLTS job offers data.
GBP/USD technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
