GBP/USD rallies to near two-week high, eyeing 1.2500 ahead of US data/Fed’s Powell.

A combination of factors prompted aggressive short-covering around GBP/USD on Tuesday.The British pound drew support from better-than-expected domestic employment figures.

A turnaround in the risk sentiment undermined the safe-haven USD and remained supportive.Investors now eye the US Retail Sales for a fresh impetus ahead of Fed Chair Powell’s remarks.

The GBP/USD pair added to its strong intraday gains and shot to a nearly two-week high, around the 1.2480 region during the first half of the European session.

The British pound strengthened across the board on Tuesday after the UK Office for National Statistics reported that the number of people claiming unemployment-related benefits dropped by 56.9K in April. This was well below expectations for a fall by 38.8 and the 46.9K decline reported in the previous month. Adding to this, the ILO Unemployment Rate in the UK edged lower to 3.7% in three months to March from 3.8% prior.

Apart from this, the ongoing US dollar profit-taking slide from a two-decade high assisted the GBP/USD pair to build on its recent bounce from the 1.2155 region, or the lowest level since September 2020. Spot prices gained traction for the third successive day, taking along some short-term trading stops placed around the 1.2400 round-figure mark. The subsequent strength might have already set the stage for additional near-term gains.

That said, the UK-EU impasse over the Northern Ireland protocol could act as a headwind for sterling. UK Foreign Secretary Liz Truss will set out how the government plans to change the rules on goods moving between Britain and Northern Ireland and how it could override parts of the Brexit deal. Apart from this, the Bank of England’s warning that the UK economy will slide into recession this year might cap gains for the GBP/USD pair.

Traders might also be reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the key US macro data and Fed Chair Jerome Powell’s appearance later this Tuesday. The US economic docket highlights the release of monthly Retail Sales figures. Meanwhile, Powell’s remarks will be scrutinized for clues about the possibility of a 75 bps rate hike in June, which will influence the USD and provide a fresh impetus to the GBP/USD pair.

EUR/USD jumps above 1.0500 on hawkish ECB commentary

EUR/USD has climbed above 1.0500 in the European session on Tuesday with the euro capitalizing on risk flows and hawkish ECB commentary. Policymaker Klaas Knot said on Tuesday that a 50 bps rate hike should not be excluded if data suggest that inflation is accumulating and broadening.


GBP/USD surges to fresh 12-day highs above 1.2470

GBP/USD has extended its daily rally and climbed to its highest level in 12 days above 1.2470. The upbeat jobs report from the UK and the risk-positive market environment fuel the pair’s impressive performance on Tuesday ahead of US data.


Gold consolidates gains above $1,820 as focus shifts to US data

Gold stays relatively quiet early Tuesday and fluctuates in a tight range above $1,820 after having posted modest daily gains on Monday. The 10-year US Treasury bond yield is up 1% so far on the day, limiting XAU/USD upside.

Gold News 

Cryptos to have a bullish week ahead

Bitcoin price has been coiling up around the base of a range for quite some time. Monday’s range formation, however, indicates that an up move is likely in the coming days. 

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s