GBP/USD could edge lower towards the 1.27/26 area – Scotiabank

GBP/USD could edge lower towards the 1.27/26 area – Scotiabank

GBP/USD is choppy in range above 1.30 but remains prone to weakness. Further weakening of below 1.30 is likely as rate hike bets for the Bank of England (BoE) are set to be trimmed.

There is room to go in the GBP’s leg lower

“Widening gilts-UST yield differentials have begun to weigh more clearly on the pound in recent trading, but we think there’s room to go in the GBP’s leg lower with the 5-yr spread currently sitting at its most negative level since October 2019.”

“We think it may only be a matter of time before markets begin to chip away at extended BoE pricing and the gap between year-end hike expectations widens further to drag sterling to re-test 1.30 and possibly head toward the 1.26/27 zone.”

EUR/USD holds above 1.0900 ahead of FOMC Minutes.EUR/USD has extended its daily rebound toward 1.0950 in the early American session on Wednesday but struggled to preserve its bullish momentum. Before the FOMC releases the minutes of its March meeting later in the session, the US Dollar Index holds steady near 99.50, supported by hawkish Fed commentary. 

EUR/USD News 

GBP/USD clings to modest recovery gains near 1.3100.GBP/USD has gone into a consolidation phase after staging a rebound toward 1.3100 during the European session. Although the greenback is struggling to find demand following Tuesday’s rally, the risk-averse market mood is not allowing the pair to gain traction.

GBP/USD News 

Gold holds above $1,920 despite surging US yields.Gold fluctuates in a relatively narrow range but manages to hold above $1,920. Although US Treasury bond yields continue to rise, the yellow metal seems to be finding demand amid the negative shift witnessed in risk sentiment.

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