GBP/USD oscillates in a narrow trading band through the Asian session on Monday.
Rebounding US bond yields help the USD to stall the post-NFP slump and cap gains.
Bets that the Fed is done hiking rates keeps a lid on the USD and should limit losses.
The GBP/USD pair kicks off the new week on a subdued note and consolidates Friday’s strong move up its highest level since September 20. Spot prices currently trade around the 1.2375 region, nearly unchanged for the day, and remain at the mercy of the US Dollar (USD) price dynamics.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, bounces off a six-week trough touched on Friday in the wake of a modest uptick in the US Treasury bond yields and acts as a headwind for the GBP/USD pair. Any meaningful USD recovery, however, seems elusive in the wake of firming expectations that the Federal Reserve (Fed) is likely to hold interest rates steady again at its December meeting.
The bets were reaffirmed by softer-than-expected US macro data released on Friday. In fact, the closely-watched US NFP report showed that the economy added 150K jobs in October as compared to 180K anticipated. Adding to this, the previous month’s reading was also revised down to 297K from 336K reported originally. Furthermore, the US ISM Non-Manufacturing PMI fell to a five-month low of 51.8 in October from 53.6 previous.
The aforementioned fundamental backdrop should hold back the USD bulls from placing aggressive bets and continue to lend some support to the GBP/USD pair That said, the Bank of England’s (BoE) bleak economic outlook, saying that the economy risks falling into recession next year, might cap gains for the major pair. Moreover, investors seem convinced that the UK central bank’s next policy move is more likely to be a rate cut.
In fact, the markets have now fully priced in a 25 bps rate cut by August 2024, which, in turn, warrants some caution before positioning for an extension of last week’s strong move up. Market participants now look to the release of the UK Construction PMI for some impetus. Later during the North American session, traders will take cues from Fed Governor Lisa Cook and BoE Chief Economist Huw Pill’s scheduled speeches.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : FXStreet – https://www.fxstreet.com/news/gbp-usd-consolidates-in-a-range-below-12400-mark-near-six-week-top-set-on-friday-202311060245
