GBP/USD witnessed heavy follow-through selling and dropped to a nearly two-week low.
The GBP/USD pair added to the previous day’s heavy losses and remained under intense selling pressure for the second successive day on Wednesday. The downward trajectory picked up pace during the early North American session and dragged spot prices to the 1.2100 neighbourhood, or a nearly two-week low.
The US dollar attracted some buying in reaction to hawkish remarks by Fed Chair Jerome Powell and shot to its highest level since June 17. This, in turn, exerted downward pressure on the GBP/USD pair. Speaking at the ECB Forum in Sintra, Powell reaffirmed bets for more aggressive rate hikes and said the US economy is well-positioned to handle tighter policy.
Powell further added that the Fed remains focused on getting inflation under control and the market pricing is pretty close to the dot plot. In contrast, the Bank of England Governor Andrew Bailey sounded cautious and noted that there were clear signs that the economy is slowing. “We are being hit by a very large real income shock,” Bailey added further.
Apart from this, sliding US Treasury bond yields, along with a generally positive tone around the US equity markets, might cap gains for the safe-haven USD and limit deeper losses for the GBP/USD pair. That said, sustained weakness below the 1.2100 round-figure mark would be seen as a fresh trigger for bearish traders and set the stage for a further depreciating move.
EUR/USD stays under pressure below 1.0500
EUR/USD is having a difficult time staging a rebound after having dropped below 1.0500 earlier in the day. FOMC Chairman Powell’s relatively optimistic comments on the economic outlook provided a boost to the dollar in the second half of the day, weighing on the pair.
GBP/USD rebounds modestly, trades near mid-1.2100s
GBP/USD fell to its lowest level in nearly two weeks near 1.2100 but managed to stage a rebound. With the dollar preserving its strength on the back of FOMC Chairman Powell’s hawkish comments, however, the pair stays in negative territory near 1.2150.
Gold steadies near $1,820 following earlier drop
Gold is struggling to make a decisive move in either direction and seems to have steadied near $1,820, where it closed on Tuesday. Despite the broad-based dollar strength, XAU/USD holds its ground amid a more-than-2% decline seen in the 10-year US yield.