Pound Sterling holds steady on Tuesday amid subdued USD demand

GBP/USD Price Analysis: Flat lines around mid-1.2300s, bearish potential seems intact

The GBP/USD pair struggles to capitalize on the overnight bounce from the 1.2300 mark, or its lowest level since November 14 and oscillates in a narrow band during the Asian session on Tuesday. Spot prices currently trade around mid-1.2300s, nearly unchanged for the day, and remain at the mercy of the US Dollar (USD) price dynamics.

Receding fears about a wider Middle East conflict remain supportive of a generally positive risk tone, which is seen undermining the safe-haven buck and lending some support to the GBP/USD pair. That said, growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer amid sticky inflation continues to act as a tailwind for the Greenback. Apart from this, speculations about more aggressive policy easing by the Bank of England (BoE) further contribute to capping the upside for the pair. Read more…

GBP/USD remains on the defensive near 1.2350, investors await UK, US PMI data

The GBP/USD pair remains on the defensive near 1.2350, the lowest since mid-November on Tuesday during the early Asian session. The USD Index (DXY) consolidates its gains above 106.10 as traders await the preliminary S&P Global Purchasing Managers Index (PMI) data from the US and UK for April.

The Federal Reserve (Fed) policymakers agreed that inflation in the US is coming down slowly, but remains high. Therefore, the US central bank is not in a hurry on interest rate cuts. Atlanta Fed President Raphael Bostic noted that interest rates will have to be kept at a “restrictive level” and might only ease “at the end of 2024”. Meanwhile, Chicago Fed President Austan Goolsbee signaled a longer timeline for rate cuts as progress on inflation had “stalled.”. The hawkish stance of the Fed on interest rates so far this year has boosted the US Dollar (USD) and created a headwind for the GBP/USD pair. Read more…