GBP/USD Mixed As European Trading Gets Underway
GBP/USD - H4
The pair capitulated to the US Dollar's strength after the Fed signaled the conclusion of its asset purchases in early March, the first rate increase in that month and more hikes within the year.
Next week, focus will shift to the Bank of England (BoE) which is forecasted to raise interest rates again when it meets on February 3rd, following December's hike that had surprised many investors. So we will wait to see how the monetary policy differential will affect the pair.
There are also political tensions brewing in the UK, with PM Johnson under pressure to resign, following multiple revelations of Downing Street parties during Covid-19 lockdowns. The PM has been defiant so far, but there are two investigations underway, one from the London Police and one from the Civil Service, which was initially expected to be published earlier this week.
GBP/USD started the day on the offensive, rebounding from two consecutive losing days that led to 2022 lows yesterday (1.3357). As such it may have an opportunity to push for the mid-1.3400s region, although a catalyst will likely be required for a break above its EMA200 (at around 1.3500-20), which would ease downward risk.
Despite the solid start, the Pound erases its gains during the European hours and heads towards the second straight losing week. It is danger of fresh yearly lows towards 1.3320-00, but the 2021 lows (1.3100) are distant for now.
Markets now await PCE Inflation figures from the US (13:30) that could potentially determine the next leg of the move.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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