GBP/USD renews intraday low to 1.2221 as the UK inflation numbers fail to lure bulls. That said, the risk-aversion wave and fears of a recession in Britain, not to forget doubts over the Bank of England’s (BOE) capacity to restore economic optimism in the UK, also weigh on the Cable pair during early Wednesday morning in Europe.
That said, the UK’s Consumer Price Index (CPI) matches 9.1% YoY forecasts versus 9.0% prior. However, the Core CPI dropped to 5.9%, below 6.0% market consensus and 6.2% previous readouts.
Also read: Breaking: UK annualized inflation rises by 9.1% in May vs. 9.1% expected
It’s worth noting that the sluggish inflation numbers allow the BOE to continue on its 0.25% rate hike trajectory, which in turn has recently gained the market’s criticism and drowned the GBP/USD prices.
Further, the UK’s Confederation of British Industry (CBI) marked an unexpected softening in price pressures during June’s data. The Domestic Price Expectation sub-index of the survey declined to its lowest level since September at +58 in June from +75 in May, per Reuters.
Additionally, fears of a £470 contraction in the British workers’ real pay due to the Brexit, as signaled by the Resolution Foundation think tank and London School of Economics also drown the GBP/USD prices.
Above all, the market’s anxiety ahead of Fed Chair Jerome Powell’s Testimony and recession woes are the key downside catalysts for the GBP/USD prices.
Amid these plays, the S&P 500 Futures drop 1.10% intraday to reverse the two-day rebound from the lowest levels since late 2020. It’s worth noting that the US Treasury yields also fail to cheer the risk-aversion as the benchmark 10-year Treasury yields dropped five basis points (bps) to 3.25% at the latest. The sour sentiment helps the US Dollar Index (DXY) to refresh its intraday high around 104.65, rising for the first day in three, by the press time.
Moving on, Fed Chair Powell’s ability to tame recession fears and justify the biggest rate hike since 1994 is necessary for the GBP/USD bears to keep reins.
GBP/USD bears justify the pair’s sustained pullback from the 21-day EMA, around 1.2360 by the press time, to direct immediate fall towards May’s low of 1.2155. Following that, the 1.2100 threshold and the 1.2000 psychological magnet will lure the bears. However, RSI conditions may challenge the pair’s further downside around the yearly bottom of 1.1933.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.