- GBP/USD falls for the second day in a row, although the downside seems limited.
- Rising US bond yields coupled with a softer risk tone benefit the USD and put pressure on the pair.
- However, traders are reticent awaiting this week’s key data and central bank events.
The pair GBP/USD It attracts some sellers for the second day in a row on Tuesday and remains defensive at the start of the European session. The pair is currently trading around the 1.2775-1.2770 region, at a three-day lowstill not far from its highest level since April 2022 touched last Friday.
US dollar (USD) extends its recent recovery from lows in more than a month and is considered a key factor putting downward pressure on GBP/USD. The Federal Reserve (Fed) last week interrupted its tightening cycle of monetary policy but noted that borrowing costs may still have to rise by as much as 50 basis points before the end of the year. These forecasts have triggered a further rise in US Treasury yields, which, coupled with a more dovish risk tone, has sent the safe-haven dollar higher for the third day in a row.
Fear of a slowdown in the global economy, especially in China, dwarfs the interest rate cut by the People’s Bank of China (PBoC). This is reflected in weaker sentiment around equity markets and drives some safe-haven flows into the USD. Dollar bulls, however, seem reluctant to open aggressive positions, preferring to wait for further clues on the Fed’s future rate hike path. raised questions about the room for maneuver available to the US central bank to continue raising rates.
Therefore, attention will remain focused on Fed Chairman Jerome Powell’s testimony before Congress on Wednesday and Thursday. Apart from this, speeches by a number of influential FOMC members will play a key role in driving demand for the USD. Meanwhile, expectations that the Bank of England (BoE) will be much more aggressive in tightening its monetary policy to combat high inflation they should limit GBP/USD losses. This could discourage traders from taking new positions ahead of the UK consumer inflation data on Wednesday and the BoE meeting on Thursday.
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.
