GBP/USD extends its upside above 1.2700, investors await fresh catalysts

FXStreet
Updated May 21, 2024 06:20
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■GBP/USD holds positive ground around 1.2710 in Tuesday’s early Asian session. 

■Fed officials remain cautious about the timing of rate cuts, emphasizing the need to hold rates higher for longer. 

■The UK CPI inflation is expected to ease to 2.1% YoY in April from 3.2% prior. 


The GBP/USD pair extends the rally near 1.2710 on Tuesday during the early Asian session. Investors await fresh catalysts, with different Federal Reserve (Fed) speakers set to speak later in the day. On Wednesday, the UK Consumer Price Index (CPI) inflation data and FOMC Minutes will be closely watched. 

The Greenback trades steady on Tuesday amid the absence of top-tier economic data releases from the US and the UK. The Fed officials remain cautious about the timing of its easing cycle and emphasize the need to hold rates higher for longer to gain confidence that inflation is on course toward the target. The upcoming FOMC minutes on Wednesday will take center stage as they might offer some clues about the future interest rate path. 

On Monday, Fed Vice Chair Michael Barr said that the central bank “will need to allow our restrictive policy some further time to continue to do its work.”  Meanwhile, Fed policymaker Philip Jefferson, another permanent voting member of the Fed's rate-setting committee, said inflation was still easing, although nowhere near as quickly as he expected. The Fed is widely expected to leave rates unchanged when they meet again in June. Financial markets see a 76% chance of rate cuts by 25 basis points (bps) in September and two cuts by the end of the year, according to the CME FedWatch Tool. The wait-and-see mode of the US Fed is likely to lift the US dollar (USD) and might cap the pair’s upside in the near term. 

On the other hand, an interest rate cut from the Bank of England (BoE) at its June meeting has not been ruled out. The BoE governor Andrew Bailey noted that the bank will be led by data such as UK wage growth and consumer price inflation. The UK CPI inflation is expected to ease to 2.1% YoY in April from 3.2% in March, while the core CPI inflation is estimated to drop to 3.6% YoY in April from 4.2% in the previous reading. The softer reading might trigger the expectation of rate cuts and weigh on the Pound Sterling (GBP). 


GBP/USD


Overview
Today last price 1.2709
Today Daily Change 0.0008
Today Daily Change % 0.06
Today daily open 1.2701
 
Trends
Daily SMA20 1.2538
Daily SMA50 1.2588
Daily SMA100 1.2632
Daily SMA200 1.2541
 
Levels
Previous Daily High 1.2712
Previous Daily Low 1.2645
Previous Weekly High 1.2712
Previous Weekly Low 1.2509
Previous Monthly High 1.2709
Previous Monthly Low 1.23
Daily Fibonacci 38.2% 1.2686
Daily Fibonacci 61.8% 1.2671
Daily Pivot Point S1 1.266
Daily Pivot Point S2 1.2619
Daily Pivot Point S3 1.2593
Daily Pivot Point R1 1.2727
Daily Pivot Point R2 1.2753
Daily Pivot Point R3 1.2794

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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