GBP/USD maintains its bid tone above 1.2200, upside potential seems limited.

GBP/USD regains some positive traction on Monday and snaps a two-day losing streak.

A positive risk tone undermines the safe-haven USD and offers some support to the pair.

Hawkish Fed, rising US bond yields, recession fears should limit any further USD losses.A dovish outcome from the BoE meeting could further contribute to capping the major.

The GBP/USD pair attracts some buying near a technically significant 200-day SMA support on Monday and stick to its gains through the first half of the European session. The pair is currently placed near the daily high, around the 1.2230 region and remains well supported by a modest US Dollar weakness.

A slight recovery in the global risk sentiment – as depicted by a generally positive tone around the equity markets – prompts fresh selling around the safe-haven buck. That said, a combination of factors might hold back traders from placing aggressive bearish bets around the USD and keep a lid on any meaningful upside for the GBP/USD pair, at least for the time being.

Despite the easing of strict COVID-19 curbs in China, a sharp rise in new infections could delay the full reopening of the economy. This, along with the protracted Russia-Ukraine war, might keep a lid on any optimistic move in the markets. Furthermore, a more hawkish commentary by the Federal Reserve last week supports prospects for the emergence of some USD dip-buying.

In fact, the US central bank indicated that it will continue to raise rates to crush inflation and projected at least an additional 75 bps increase in borrowing costs by the end of 2023. This, in turn, pushes the US Treasury bond yields higher and favours the USD bulls, warranting caution before positioning for any further appreciating move for the GBP/USD pair.

Adding to this, a dovish outcome from the Bank of England meeting, with two MPC members voting to keep interest rates unchanged, could undermine the GBP amid looming recession risks. In the absence of any relevant macroeconomic releases, this might also contribute to capping the GBP/USD pair and suggests that the path of least resistance for spot prices is to the downside.

EUR/USD consolidates gains above 1.0600 after upbeat German IFO

EUR/USD is holding gains above 1.0600, following encouraging indicators from Germany’s IFO business survey. The pair remains underpinned by a broad-based US Dollar sell-off, as risk sentiment turns positive. 

EUR/USD News GBP/USD holds above 1.2200 amid US Dollar weakness

GBP/USD is clinging to recovery gains above 1.2200, as the US Dollar licks its wounds amid an improved market mood on Monday. GBP bulls shrug off the UK economic challenges and dovish BoE policy outlook. 


Gold: Upside remains capped below $1,800 amid higher yields

Gold price lacks any firm directional bias on Monday and remains confined in a narrow range below $1,800. A US Dollar downtick lends some support but the further upside remains elusive amid rising Treasury bond yields. 

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