On Thursday, the GBP/USD pair did not add to its gains from the day before. Instead, sellers drew the 1.2075-1.2080 range. Indeed, buying US dollars in the early European session caused spot prices to drop to 1.2000.
Even though China is relaxing COVID-19 restrictions, investors are still worried about a worsening of the global economic collapse. Some safe-haven funds are moving toward the US dollar because of a new drop in US stock futures, putting pressure on the GBP/USD pair. But the Fed’s smaller rate hikes may discourage USD bulls and keep losses for the primary currency to a minimum.
The December FOMC meeting minutes, released on Wednesday, showed that all officials agreed that borrowing costs should go up more slowly. The less hawkish prediction makes US Treasury bond yields close to their lowest level in a few weeks, which could hurt the dollar and help the GBP/USD pair. Traders may also want to wait until Friday’s NFP report comes out.
The GBP/USD pair may go up after the ADP private-sector jobs report, which is on the US economic agenda for Thursday. It, US bond yields, and how people feel about risk should all affect how the USD price moves and make short-term opportunities before the considerable data risk.
Conclusion
Lee Sue Ann and Quek Ser Leang of UOB Group think GBP/USD will trade between 1.1900 and 1.2150 in the coming weeks.