- GBPUSD regains some positive traction on Thursday amid modest USD weakness.
- Upside potential seems limited as traders look forward to the US CPI report.
- The BoE’s gloomy economic outlook is also helping to limit the pair’s gains.
The pair GBPUSD attracts some buying near the 1.1350 area on Thursday and recoups some of the previous day’s heavy losses. The pair hangs on to intraday gains during the first half of the European session, though seems to have a hard time capitalizing on the move beyond the round level of 1.1400.
A modest decline in US Treasury yields., coupled with a positive tone around equity markets, are not helping the safe-haven dollar capitalize on the previous day’s rebound from a multi-week low. Apart from this, a certain Repositioning Trade Ahead of Crucial US Consumer Inflation Figures It limits the rise of the dollar, which in turn is seen as lending some support to the GBPUSD pair.
That said, a combination of factors is preventing traders from opening aggressive positions and acting as a headwind for the pair. Despite the expectations that the Fed will slow the pace of its policy tightening, markets continue to price in the possibility of a 50 basis point rate hike in December. This should help limit the decline in US bond yields and the dollar.
Also, the gloomy outlook from the Bank of England for the UK economy could continue to undermine the pound sterling and help limit the rise of the GBPUSD pair. Furthermore, traders would prefer to wait for a new catalyst in the expected US CPI report. The data will influence future rate hikes by the Fed and will play a key role in driving short-term dollar demand.
This, in turn, warrants some caution on the part of the bulls before positioning themselves for any intraday moves of GBPUSD appreciation. Next, attention will turn to the UK’s third quarter preliminary GDP report, due for release on Friday. Additionally, traders will be watching UK Chancellor of the Exchequer Jeremy Hunt’s tax return due on November 17 to determine the next directional move for the pair.
GBPUSD technical levels
Source: Fx Street
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