English
GBP/USD Persists Below 1.2300 As It Struggles To Capitalise On An Overnight Rebound From Its Weekly Low
On Thursday, the GBP/USD pair struggles to acquire significant traction and oscillates within a narrow range. A further decline in US bond yields provides support and keeps USD supporters on the defensive. Uncertainty surrounding the rate hike by the Federal Reserve is preventing investors from placing new directional wagers.
Thursday morning during the Asian session, the GBP/USD pair oscillates in a narrow trading band, halting the overnight modest rebound from the 1.2240 area or the weekly low near the 100-hour Simple Moving Average (SMA). Presently, spot prices hover around 1.2280, which is virtually unaltered for the day; they continue to be influenced by the price dynamics of the US Dollar (USD).
As a result of growing consensus that the Federal Reserve (Fed) will not raise interest rates once more, US Treasury bond yields extend the recent decline and keep USD supporters on the defensive; this provides a tailwind for the GBP/USD pair. Conversely, traders appear averse to aggressive adverse wagers on the USD and would rather await further information regarding the trajectory of the Federal Reserve's forthcoming rate hikes.
In contrast, Fed Chair Jerome Powell remains silent regarding monetary policy in a speech scheduled for later this Thursday. Powell delivered a speech on Wednesday. Investors will diligently analyse his remarks in search of indications regarding the subsequent policy action, which will significantly impact the short-term USD price dynamics and offer substantial support to the GBP/USD pair in the absence of pertinent data from the UK.
In contrast, the British Pound (GBP) encounters difficulties in attracting purchasers due to the Bank of England's (BoE) officials' ambiguous stance regarding the potential implementation of a rate reduction in the coming year. Huw Pill, the chief economist at the Bank of England (BoE), stated on Monday that the current market pricing for a first-rate reduction in August 2024 does not appear to be completely irrational. In contrast, BoE Governor Andrew Bailey refuted rumours regarding potential interest rate reductions.
Looking ahead, speculators will be influenced by a speech that BoE's Pill is scheduled to deliver on Thursday. The release of the customary Weekly Initial Jobless Claims data later in the early North American session will also be analysed for short-term opportunities, although Powell's speech will remain the primary focus. Although the fundamental environment is inconsistent, caution is advised prior to establishing a firm near-term direction.
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