GBP/USD sellers eye a break below 1.2000, which would pave the way towards 1.1800.The GBP/USD remains defensive after tumbling below the 20 and 50-DMAs on Wednesday, extending its losses for the second straight day. Factors like San Francisco Fed’s Mary Daly pushing back against a “dovish” tilt by the Fed, perceived by market participants on the release of the FOMC minutes on Wednesday, turned sentiment sour. The greenback is staying a comeback, with the US Dollar Index up 0.48%, above the 107.00 threshold.
The GBP/USD is trading at 1.2005, below its opening price, after hitting a daily high at 1.2079 early in the European session.
GBP/USD falls on sentiment shift, with Fed speakers pushing back rate-cuts
Mary Daly, San Francisco Fed’s President, commented that it is too early to declare victory on inflation and said that 50 or 75 bps is reasonable for the September meeting, via CNN. She added that core inflation is still increasing and that the market lacks understanding, but consumers understand that rates won’t go down right after going up.
In the meantime, US Initial Jobless Claims for the week ending on August 13 dropped to 250K, less than 265K estimated by analysts, while the housing market continued to cool down due to further evidence of Federal Reserve rate hikes. Existing Home Sales for July dropped 5.9%, at a rate of 4.8 million units in July, the lowest level since May 2020, when sales hit their lowest point during the Covid-19 lockdowns.
The GBP/USD is still neutral to downward bias, but central bank monetary policy convergence could lead to range-bound trading. With rates in both countries elevating, growth differences between them will enter into play to dictate the direction of the pair.
AUD/USD bounces modestly after flirting with 0.6900
AUD/USD trades around 0.6925 after nearing 0.6900 earlier in the day. The greenback is the daily winner as investors reconsider FOMC Minutes. Federal Reserve officials provided hawkish and optimistic messages, spooking the recession’s ghost.
EURUSD on the back foot below 1.0100
The EUR/USD pair trades just below the 1.0100 threshold amid the prevalent dollar’s strength. EU confirmed annual inflation at 8.9% YoY in July, while US data was mostly encouraging, except for that related to the housing sector.
Gold bearish breakout underway
Gold is losing ground for a fourth consecutive day, trading at fresh weekly lows. The metal suffers from renewed dollar strength, as US data suggest the economy remains resilient to the latest global woes, leaving room for the Fed to maintain its aggressive stance.