GBP/USD attracts some dip-buying on Wednesday, albeit lacks any follow-through.
Bets for additional BoE rate hikes underpin the GBP and lend support to the major.
Traders also seem reluctant and prefer to wait for the release of the FOMC minutes.
The GBP/USD pair trims a part of intraday losses and climbs back closer to the 1.2100 mark during the early North American session on Wednesday. Spot prices, however, remain below a multi-day peak, around the 1.2145-1.2150 region touched the previous day, as traders keenly await the FOMC minutes before placing fresh bets.
Ahead of the key risk, some repositioning trade prompts some US Dollar selling and lends support to the GBP/USD pair. Apart from this, expectations for additional interest rate hikes by the Bank of England (BoE) act as a tailwind for the British Pound. The speculations were fueled by UK PMIs released on Tuesday, which indicated that business activity rose more than expected in February. This, in turn, lifted optimism that the BoE may be able to continue tightening without triggering a steep economic downturn.
The downside for the USD, meanwhile, is likely to remain limited amid growing acceptance that the Fed will stick to its hawkish stance for longer in the wake of stubbornly higher inflation. In fact, the US CPI and PPI data released last week showed that inflation isn’t coming down quite as fast as hoped. Adding to this, several FOMC policymakers, including Fed Chair Jerome Powell, recently stressed the need to keep lifting rates gradually to fully gain control of inflation.
Hence, the FOMC minutes will be closely scrutinized for fresh clues about the Fed’s future rate-hike path. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the GBP/USD pair. In the meantime, looming recession risks, along with geopolitical tensions, should benefit the Greenback’s relative safe-haven status and contribute to capping any meaningful upside for the major, at least for the time being.
EUR/USD holds steady near 1.0650, eyes on FOMC Minutes
EUR/USD has managed to rebound to the 1.0650 area after having declined below 1.0630 earlier in the day. The cautious market mood helps the US Dollar hold its ground in the American session as investors wait for the Fed to release the minutes of the year’s first policy meeting.
EUR/USD News
GBP/USD stabilizes near 1.2100 ahead of Fed Minutes
GBP/USD has stabilized at around 1.2100 in the American session on Wednesday. Markets remain choppy as investors keep a close eye on global bond yields. FOMC Minutes will be looked upon for fresh impetus later in the day.
GBP/USD News
Gold: XAU/USD stable above $1,830
Financial markets struggled for a clear direction early Wednesday as investors await the Federal Open Market Committee (FOMC) Meeting Minutes. XAU/USD peaked at $1,845.99 a troy ounce mid-European session but quickly retreated amid prevalent US Dollar demand. The bright metal currently trades around $1,835, unchanged on the day.
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