- GBP/USD breaks a four-day winning streak to hit a one-month high amid resurgent demand for the USD.
- A nice rally in US bond yields revives USD demand ahead of the US CPI report.
- Mixed UK jobs data fails to impress sterling bulls or boost the pair.
He GBP/USD fails to capitalize on its modest intraday rally and trades negatively through the first half of the European session on Tuesday. The pair is currently just above the 1.2150 leveldown more than 0.25% on the day, and for now appears to have snapped a four-day winning streak to hit a 1-month high around the 1.2200 level hit on Monday.
The pound sterling has risen slightly after the release of the monthly employment data in the United Kingdom, which have reaffirmed expectations of additional rate hikes by the Bank of England (BoE) later this month. However, the resurgence in demand for the US dollar, fueled by a nice rally in US Treasury yields, has turned out to be a key factor that has forced the GBP/USD pair to erode some of the strong gains from the previous day.
The Federal Reserve moved to limit the consequences of the sudden collapse of the Silicon Valley Bank (SVB) and announced on Sunday that it will make additional funds available to eligible depository institutions to help ensure banks have the ability to meet the needs of all their depositors. This, in turn, helps ease fears of a broader systemic crisis and is seen pushing US bond yields higher across the board.
The strong intraday rally in the USD could also be attributed to some trading in repositioning before the release of key US consumer inflation figures., which will be published later during the American session. However, Speculation that the Fed could slow, if not stop, its rate hike cycleamid tensions in the US banking system, could cap any significant rise in the USD and provide some support for GBP/USD.
Traders may also refrain from taking aggressive positions, preferring to stay out of the risk of key central bank events: next Wednesday’s FOMC decision, followed by next week’s Bank of England meeting. Therefore, it would be prudent to wait for strong buying before confirming that the GBP/USD’s recent rally from the 1.1800 level, or the yearly low reached last week, has come to an end.
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.
