GBP/USD has slipped near 1.3150 ahead of the BOE’s Bailey speech.The risk-off impulse due to the resurgence of Covid-19 in China has improved safe-haven appeal.
UK’s CPI at 6.2% indicates one more rate hike by the BOE in May.
The GBP/USD pair has witnessed selling pressure in early Tokyo, which has drifted the pair lower towards 1.3156. The cable has violated two-trading sessions low at 0.3156 and is eyeing more weakness ahead of the Bank of England (BOE) Governor Andrew Bailey’s speech, which is due on Monday.
The market participants are waiting for the speech from BOE’s Bailey as it will provide further guidance to the pound buyers for the likely monetary policy action in May. BOE’s Bailey and his colleagues have already increased their interest rates to 0.75% to combat the inflation mess. The BOE has increased its interest rates by 25 basis points (bps) each time in its last three monetary policy meets and has been the first central bank worldwide that has raised its interest rates to post the Covid-19 pandemic. Also the last week’s Consumer Price Index (CPI) print of 6.2% has advocated one more interest rate hike going forward. The CPI at 6.2% was much higher than the estimate of 5.9% and the previous print of 5.5%.
Meanwhile, the US dollar index (DXY) has scaled above 99.00 amid rising cases of Covid-19 in China. The situation of Lockdown in China has underpinned the risk-aversion theme and investors are shifting funds to the safe-haven assets. This week, the DXY is likely to be dictated by the unfolding of the US Nonfarm Payrolls (NFP), which will be announced on Friday. A preliminary estimate for the US NFP is 488K against the previous print of 678K.
EUR/USD hits two-week lows below 1.0950 on US dollar’s strength.EUR/USD remains pressured towards 1.0900, at its lowest level in two weeks. The US dollar holds firmer amid risk-aversion while the US 10-year Treasury yields refresh three-year high on hawkish Fed’s outlook. Rising covid concerns in Germany and China add to the euro’s plight.
GBP/USD falls towards 1.3100 ahead of BOE’s Bailey.GBP/USD is dropping towards 1.3100 amid a notable US dollar demand across the board. Fed-BOE policy divergence favors the greenback amid firmer US Treasury yields. Renewed covid concerns and the Ukraine crisis will likely keep GBP bulls at bay. Bailey’s speech awaited.
Gold drops further below $1,950 amid firmer US dollar, yields. Gold price is extending its weakness below $1,950, having failed to find acceptance above the $1,960 barrier in the previous week. Markets remain risk-averse amid rising concerns over the covid resurgence in Asia, especially in China, underpinning the US dollar’s safe-haven appeal at gold’s expense.