Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

GBP/USD Punches Past 1.21, Bailey Up Next

Published 02/08/2023, 07:56 AM
GBP/USD
-
C
-

The British pound is in positive territory on Wednesday. In the European session, GBP/USD is trading at 1.2107, up 0.47%. The pound is recovering from a nasty slide of almost 400 points, dropping below the 1.20 line for the first time since Jan. 23.

Powell Goes Easy on the Markets

The equity markets were nervous ahead of Fed Chair Powell’s remarks at an event in Washington on Tuesday. There was concern that Powell would push back against the recent rally and deliver a hawkish message, especially after the sizzling nonfarm employment report last week.

Powell decided not to chastise the markets and essentially reiterated what we heard at last week’s meeting. That message is that inflation is moving lower but needs to fall much further, and further rate hikes are likely needed. Powell has said more than once that the Fed policy will not be swayed by one or two economic reports, and he held to that view by not shifting his stance due to the hot employment release. Equity markets responded positively to Powell’s message, while the US dollar was slightly lower against most of the majors.

How much further will the Fed tighten? The markets have revised upwards their forecast for the terminal rate to 5.1%, up from below 5% before the NFP report. Fed Bank of Minneapolis President Neel Kashkari said on Tuesday that he expects rates to peak at 5.4%, and a Citigroup (NYSE:C) note warned that rates could go as high as 6%. The markets are still expecting a rate cut late in the year, despite Powell stating at the FOMC meeting that there were no plans to lower rates.

There are no releases out of the UK today. BoE Governor Bailey will be in the spotlight on Thursday as he testifies at the Treasury Committee Hearings. The BoE raised rates by 0.50% last week, and the markets will be all ears, looking for clues as to what the central bank has planned for the next meeting on Mar. 23.

GBP/USD Daily Chart

GBP/USD Technical

  • 1.1958 and 1.1804 are providing support
  • There is resistance at 1.2035 and 1.2173

Original Post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.