- GBP / USD is moving lower on Friday and returns a portion of the strong gains from the previous day.
- Rising US bond yields revive demand for the USD and put some downward pressure.
- The upbeat UK economic outlook and upbeat comments from Vlieghe help limit losses.
- The market’s focus is on the publication of the Fed’s preferred inflation indicator.
The pair GBP/USD it is moving slightly lower during the European session on Friday, although it lacks a strong continuation sell. At time of writing, the pair is recovering from daily lows, although it remains negative on the day. just below the e 1.4200 level.
The pair has continued its struggle to find acceptance above the round 1.4200 level and has seen some selling on the last trading day of the week. The fall is due exclusively to a good recovery in demand for the US dollar and it has forced the GBP / USD pair to return a part of the strong positive movement of the previous day.
The USD has found some support in a rebound in US Treasury yields, reinforced by news that the US president, Joe Biden to Announce a $ 6 Trillion Budget for Fiscal Year 2022. The upcoming government debt offering has revived fears about rising inflationary pressures, which could force the Fed to tighten its monetary policy.
That said, a combination of supporting factors has prevented investors from opening aggressive bearish positions around the GBP / USD pair. On Thursday, the MPC member of the Bank of England, Gertjan Vlieghe indicated that the central bank could raise rates well into next year if there is a smooth transition in the labor market and the economy recovers faster than expected.
This is in addition to optimistic outlook for UK economic recovery after the pandemic amid the gradual relaxation of lockdown measures. In fact, British Prime Minister Boris Johnson also said that there is currently nothing in the data to delay the plan to end the restrictions entirely on June 21. This should continue to act as a tailwind for the British pound.
Investors also seem reluctant, preferring to wait on the sidelines before the Fed’s preferred inflation gauge is released on Friday. The US Bureau of Economic Analysis is expected to release the core PCE price index during the US session, This will influence the price dynamics of the USD and could generate some momentum to the GBP / USD pair.
GBP / USD technical levels