GBP/USD Freezes Close to Many Days’ Low Point, Around the Middle of 1.3100 While Awaiting Bailey’s Speech
Weak Start of the Week
The GBP/USD currency pair is maintaining its continuous offered perspective throughout the early stages of the European session and it was seen at the time of putting this together to be trading near the mid-1.3100 zones. It was just a few points over the multi-day low points it reached earlier.
GBP/USD price chart. Source TradingView
The pair sadly started the week from a fragile standing point and it stretched out the retracement slide all the way from last week which was at the 1.3300 figure benchmark while there is a continuous buying rate in the US dollar. Increased realization and finally acceptance of the Federal Reserve’s policy and that it would implement a deeper aggressive monetary policy in a reaction as a way of fighting the escalating rate of inflation has now served in the favor of the pair, and as a tailwind for the US dollar particularly.
With the current turn of events and managed expectations, the financial market has consistently been pricing in up to 50 basis points in interest rate increase during the reserve’s monetary policy meeting in May. It should be noted that the latest increase experienced in the price of commodities is speculated to apply an upward stream of pressure on the already pumped up prices of necessary domestic products.
In turn, the current condition has pushed up the yields on the US ten-year American government bond yields that go farther from the 2.5% benchmarks or a new two-year yield and it underpinned the pair.
Cold Mood Across the Market
Aside from the bond yields and price factors resulting from Federal Reserve policies, the general mood of caution that sweeps through the market was considered as an additional factor that was of benefit to the US dollar and its general status as a safe-haven commodity.
The money market maintained its position on the sharp edge as there is no significant progress in the several peace talks that have gone on between Russia and Ukraine. There are also new Covid restrictions and outright lockdown in parts of China due to worsening Covid conditions. This also impacts heavily on the sentiments of investors towards currencies.
The British pound, on the other hand, got weighed down due to dovish perceptions of the Bank of England’s policy move this month. The GBP/USD currency pair, nevertheless, displayed some tenacity when it struck lower points while traders showed reluctance in staking aggressively ahead of the speech expected from the Bank of England Governor, Andrew Bailey.