GBP/USD remains on the defensive above 1.2420, eyes on UK CPI data

Source Fxstreet
Apr 16, 2024 23:27
  • GBP/USD attracts some sellers to 1.2430 on the stronger USD. 
  • Fed’s Powell said the US monetary policy needs to be restrictive for longer. 
  • BoE’s Bailey saw strong evidence that UK inflation was falling. 

The GBP/USD pair remains on the defensive around 1.2430 during the early Asian session on Wednesday. The further upside in the US Dollar (USD) from a hawkish tilt by Federal Reserve (Fed) Chair Jerome Powell and upbeat US Retail Sales data weighs on the GBP/USD pair. Investors will take more cues from the UK Consumer Price Index (CPI) on Wednesday. 

The Fed Chair Jerome Powell said on Tuesday that monetary policy needs to be restrictive for longer and further dampen investors' hopes for meaningful rate cuts this year. Powell added that the recent economic data have clearly not given the Fed greater confidence and it's likely to take longer than expected to achieve that confidence. The US central bank has kept its benchmark interest rate in a target range between 5.25% and 5.5% since July 2023. Financial markets have had to reset their expectations for rate cuts this year, with the anticipation of one or two reductions that will not start until September.

On the other hand, investors price in two rate cuts by the Bank of England (BoE) this year, with the first move in August or September and earlier rate cuts than the Fed. This, in turn, has exerted some selling pressure on the Pound Sterling (GBP) and created a headwind for the GBP/USD pair. 

The BoE Governor Andrew Bailey said on Tuesday there was strong evidence that UK inflation was falling and that the question for BoE policymakers remained how much more evidence was necessary before starting to cut interest rates. Bailey further stated that different inflation paths for the US and Europe this year could lead to somewhat different paths for interest rates.

GBP/USD

Overview
Today last price 1.243
Today Daily Change -0.0016
Today Daily Change % -0.13
Today daily open 1.2446
 
Trends
Daily SMA20 1.2615
Daily SMA50 1.2653
Daily SMA100 1.2667
Daily SMA200 1.2582
 
Levels
Previous Daily High 1.2499
Previous Daily Low 1.2436
Previous Weekly High 1.2709
Previous Weekly Low 1.2427
Previous Monthly High 1.2894
Previous Monthly Low 1.2575
Daily Fibonacci 38.2% 1.246
Daily Fibonacci 61.8% 1.2475
Daily Pivot Point S1 1.2421
Daily Pivot Point S2 1.2397
Daily Pivot Point S3 1.2358
Daily Pivot Point R1 1.2484
Daily Pivot Point R2 1.2523
Daily Pivot Point R3 1.2547

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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