The GBP/USD remains positive on the week, up by 0.82%.The UK Prime Minister Boris Johnson won a no-confidence vote, and the GBP reacted positively.
The World Bank reduces the global economic growth from 4.1%.UK’s PMI remains in expansionary territory but shows the economy is slowing.
The US trade deficit narrowed the most in nearly 9 ½ years.The British pound climbs for the second straight day amidst two days of a volatile trading session, courtesy of political issues, mainly the Boris Johnson no-confidence vote on Monday. At the time of writing, the GBP/USD is trading at 1.2593, gaining 0.54% on the day.
UK’s PM Boris Johson to remain as Prime Minister, the GBP/USD edges up
So far, the GBP/USD remains buoyant, courtesy of Boris Johnson’s victory, although by a tight margin, spurred a brief relief rally on the pound. Also, falling US Treasury yields narrow the spread between the 10-year US and UK bond yields. However, the sentiment shifted negative, as European bourses closed with losses, while US equities showed some weakness, except for the Russell 2000, up by 0.53%.
After Wall Street opened, the World Bank lowered the global growth forecast to 2.9% from 4.1% foreseen in January. World Bank President David Malpass said that “the risks of stagflation, the Russo-Ukraine war, and lockdowns in China have been hammering growth and that a recession will be hard to avoid for many countries. Meanwhile, though global inflation is expected to moderate next year, it will likely remain above target in many economies.“
Worth noting that in the Asian session, the Reserve Bank of Australia (RBA) hiked rates by 0.50%, adding to the list of “aggressive” central banks.In the meantime, the US Dollar Index, a gauge of the buck’s value vs. six peers, records minimal losses of 0.01%, sitting at 102.401, a tailwind for the GBP/USD.
AUD/USD resumes advance, trades near 0.7240
The AUD/USD pair posted a strong comeback amid the broad dollar’s weakness and the better tone of Wall Street. RBA’s aggressive 50 bps rate hike provided additional support to the aussie despite the risk-averse environment.
EUR/USD battles to retain the 1.0700 level
The EUR/USD pair bounced from a weekly low of 1.0651 as the greenback retreated alongside US government bond yields. Gains are limited ahead of the European Central Bank monetary policy decision later in the week.
Gold: Tepid recovery within a risk-averse environment
Gold started the day on the back foot, bottoming at $1,836.90 during Asian trading hours. XAU began to recover after London’s opening bell, reaching an intraday high of $1,853.57, as easing US government bond yields undermined demand for the greenback, despite persistent risk-aversion.