- GBP / USD sees some selling on Thursday and is pressured by a combination of factors.
- Lowering expectations of a BoE rate hike and Brexit woes continue to act as a headwind for the British pound.
- A softer risk tone benefits the safe-haven USD and also contributes to the pair’s selling bias.
The pair GBP/USD remains on the defensive at the start of the American session on Thursday, although it has managed to recover some pips from the low day. At the time of writing, the pair is trading at 1.3203, still losing -0.17% on the day.
The pair struggled to capitalize on the previous day’s rebound from the 1.3160 ​​area, or the lowest level since November 2020, and witnessed further selling on Thursday. The imposition of strict restrictions due to covid-19 in the UK forced investors to lower your expectations for an imminent interest rate hike by the Bank of England. This, along with the persistent uncertainties related to Brexit, continued to act as a headwind for the British pound.
Secondly, the US dollar attracted new purchases and reversed a portion of the previous day’s profit-taking slide amid weaker tone around equity markets. Apart from this, Optimum Fed expectations further underpinned the USD and they put some downward pressure on GBP / USD. The drop, however, remains supported, as investors prefer to wait on the sidelines before the release of US consumer CPI inflation figures on Friday.
Markets have been pricing in the possibility of an eventual Fed rate hike in May 2022 amid concerns about rising inflationary pressures. Therefore, the US CPI report would influence the Fed’s decision to reduce its stimulus at a faster pace and set the stage for a rate hike. This, in turn, will drive demand for the USD and provide further momentum to the GBP / USD pair.
Looking at today’s data, there were 184,000 initial claims for unemployment benefits in the United States for the week ending December 4, data released by the United States Department of Labor on Thursday revealed. This marks a new post-pandemic low. and in fact it is lowest reading since 1969.
Aside from this, developments around the coronavirus saga and broader market risk sentiment would allow investors to seize some short-term opportunities around the GBP / USD pair.
GBP / USD technical levels
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