- Having found support above 1.4100, GBP/USD has moved back into the mid-1.4100s.
- Though having now been overtaken by AUD, NZD and NOK, GBP is still a strong performer this week.
As Wednesday FX trade draws to a close and volumes this ahead of the start Thursday’s Asia Pacific session, GBP/USD look set to close with modest 0.2% or just under 30 pip gains. Despite a lack of any fundamental catalysts and amid thin volumes, the pair rocketed from the 1.4100s to as high as 1.4240 during Wednesday’s Asia Pacific session but spent most of the rest of the day gradually pulling back towards the 1.4100 handle. Over the first half of the US trading session, the pair found support at this key level and in the last few hours has started to rise again. Currently, GBP/USD trades around the 1.3940 mark and the sterling bulls will be targeting a gradual grind back to the multi-year highs set earlier during Wednesday’s session.
Driving the day
Bank of England members spoke before the UK Parliament Treasury Select Committee on Wednesday and nothing new was mentioned about the bank’s monetary policy plans going forward. On the economy, the bank noted the various downside risks faced by the economy, such as concerning Covid-19 variants, rising unemployment if the government pulls the plug on furlough and EU/UK trade disruptions, but also noted upside risks such as if the vaccine rollout goes faster than planned. Given the lack of direct policy implications, GBP was not particularly interested in the event and thus spent the majority of Wednesday’s session trading as a function of US dollar flows.
This time on Tuesday, GBP was the best performing currency in the G10 on the week. Since then, it has been overtaken by NZD (boosted by a less dovish RBNZ), AUD and NOK (both boosted in line with buoyant commodity prices and recovering stocks market sentiment). Still, the currency holds onto gains on the week versus the US dollar of nearly 1.0%. That compares to the euro, which is just 0.4% higher and the yen, which is down 0.3% on the week versus USD. It seems as though the vaccine/reopen trade is still very much alive and the main thing that might higher GBP gains going forward could be either a combination of profit-taking or fears of over-valuation.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.