- GBP/USD comes under renewed selling pressure on Thursday amid a rebound in demand for the USD.
- Recession fears weigh on investor sentiment and drive some safe-haven money flows into the dollar.
- The less hawkish outlook from the Fed could hold back the dollar and limit the pair’s losses.
The pair GBP/USD fails to capitalize on the previous day’s positive move and attracts new sellers near the 1.2075-1.2080 zone on Thursday. The constant intraday decline drags the pair down up to the psychological level of 1.2000 during the early stages of the European session and is supported by the appearance of some buying around the US dollar.
Despite the relaxation of strict COVID-19 restrictions in China, Concerns over a deeper global economic downturn continue to weigh on investor sentiment. This is evidenced by a further move lower in US stock index futures, which in turn is seen driving some safe-haven money flows into the dollar and putting downward pressure on the dollar. GBP/USD pair. Having said that, prospects for smaller rate hikes by the Fed could dampen USD bulls when opening aggressive positions and helping to limit the pair’s losses.
In fact, the minutes of the December FOMC policy meeting, released on Wednesday, showed that officials unanimously supported raising borrowing costs at a slower pace. The less rosy outlook keeps US Treasury yields near multi-week lows, which could act as a headwind for the dollar and provide some support for GBP/USD. Traders may also prefer to stay on the sidelines ahead of the release of the US monthly employment report, popularly known as NFP, on Friday.
Meanwhile, the US economic agenda on Thursday, with the ADP report on employment in the private sector, could provide some momentum to the GBP/USD pair later at the beginning of the American session. This, along with US bond yields and broader risk sentiment, should influence USD price action and help produce near-term opportunities.
GBP/USD technical levels
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.
