- GBP/USD renews its intraday high as bulls hold the reins for the second day in a row.
- Hardline comments from the Bank of England governor join Brexit optimism to boost sterling.
- Fears of a bank crash, mixed speeches from the Fed and bearish yields weigh on the US dollar.
He GBP/USD hits daily highs near 1.2320 at the start of the European session on Tuesday, as risk appetite joins supportive price news from the UK to please buyers of the pair. The Hope Bank of England Governor Andrew Bailey will have a few hard-line words could reinforce the bullish momentum in GBP/USD, especially after it went in the same direction the day before.
On Monday, Bailey sensed persistent inflationary pressureswhile saying: “If they become apparent, further monetary tightening would be required“, adding strength to the advances of the pair.
Besides, the efforts of global policy makers through emergency lines of credit extended to troubled banks and deposit insurance plans underpin firmer sentiment and weigh on the US dollar, which in turn drives the price of GBP/USD. Recently, comments from central bankers, pushing back concerns about the banking crisis and the Silicon Valley Bank (SVB) deal, have bolstered risk appetite and weighed on the dollar.
That being said, the US Treasury Department said that the country will continue to use tools to prevent bank contagion, as necessary. Before that, Federal Reserve Governor Philip Jefferson and Fed Vice Chairman for Supervision Michael Barr showed their willingness to rein in the banking crisis, while signaling an easing of inflation woes.
It is worth noting that recent negative US data weighed on Fed hawkish expectations, especially after US recession talks, previously hinted at by Minneapolis Fed President Neel Kashkari, put downward pressure on the US dollar. On Monday, the Dallas Fed Manufacturing Business Index fell to -15.7 in March, down from -10.9 expected and -13.5 prior.
Against this background, the 10-year and 2-year US Treasury yields were nearing 3.52% and 3.98%, respectively, at the time of writing, prompting the week’s bounce after three weeks down.
Looking ahead, GBP/USD bulls will look for more hawkish comments from Bailey, as well as softer US CB Consumer Confidence results for March, which should hold GBP buyers back. /USD with the check.
GBP/USD Technical Analysis
GBP/USD stretches the previous rise from the 50-period SMA and 61.8% Fibonacci retracement of the January-March trading decline, around 1.2220 and 1.2200, respectively. That being said, the confirmation of the bearish rising wedge pattern last week keeps sellers of the pair hopeful.
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.
