In Asia, the GBP/USD fell to about 1.2320 before slowly rising again. Once again trading near 102.60, the U.S. Dollar Index (DXY) has since retreated, allowing the Cable to retake 1.2350. Although concerns about a new financial crisis have subsided and the chance of a Fed interest rate hold has grown, bearish bets on the U.S. Dollar Index (DXY) have resumed.

The Dollar Index may fall back to its low point of the day, at 102.40, if investors become more willing to take on risk. The demand for risky assets drives up S&P500 futures. U.S. stocks are getting more attention as investors worry less about a possible financial takeover.
The demand for U.S. government bonds has increased again, bringing 10-year Treasury yields down to 3.55 per cent.

The news that BoE Governor Andrew Bailey will hike rates if inflation persists has boosted the pound’s value. The market anticipates another BoE rate hike if UK inflation remains above 10%.

Trade Idea

The UK’s GDP report on Friday will be helpful to investors. The consensus forecast for the U.K. economy in the final quarter of CY2022 is stagnation. Maintaining a GDP of 0.4% is expected. The UK economy will enter a deep recession due to stagnant GDP and persistent inflation.