As noted in our today’s review, the US dollar is still leading the market, while investors are in no hurry to build up holdings of US debt due to unresolved issues regarding its limit. Democrats and Republican representatives have not yet reached an agreement. Differences persist, although there are reportedly fewer contentious issues remaining.
As for one of the main competitors to the dollar in the currency market, the British pound is being supported by expectations of another interest rate hike by the Bank of England after the release of April inflation data on Wednesday. According to statistics, consumer prices rose by 8.7% in annual terms in April, down from 10.1% in March, but core prices excluding food, energy, and tobacco accelerated to 6.8% last month from 6.2% in March.
British finance minister Jeremy Hunt reiterated on Wednesday the need to stick to the government’s plan to get inflation down in order to lower taxes. At the same time, Bank of England Governor Andrew Bailey stated on Tuesday at a meeting of the United Kingdom Parliament’s Treasury Select Committee (TSC) that the tool of interest rate hikes should be used carefully. In addition, he expressed concern about the risk of persistently high inflation (food prices increased by 19.0% in April).
Most economists believe that the Bank of England will continue to raise interest rates up to 5.5% (currently at 4.50%).
Today, GBP/USD traders should be guided by the dollar’s dynamic. It is worth paying attention to important macroeconomic statistics from the United States.
Better-than-expected figures will drive the greenback up. Conversely, worse-than-expected statistics may bring the dollar down in the short term.
It is also possible that investors will continue to lock in profits from long positions on the dollar ahead of the weekend. In this case, the US currency will extend losses today. On Monday, trading activity is expected to be sluggish as the macroeconomic calendar is empty due to Spring Bank Holiday in the UK, Memorial Day in the US, and the continued celebration of Pentecost in Catholic countries (it falls on Sunday, May 28).
From a technical point of view, the GBP/USD pair is trading within the zone of short-term and long-term bearish markets, while remaining above the key mid-term support levels of 1.2290 and 1.2245. A breakout of short-term resistance levels at 1.2417 and 1.2441 will bring the pair back into the zone of a medium-term bullish market.
The material has been provided by InstaForex Company – www.instaforex.com
As noted in our today’s review, the US dollar is still leading the market, while investors are in no hurry to build up holdings of US debt due to unresolved issues regarding its limit. Democrats and Republican representatives have not yet reached an agreement. Differences persist, although there are reportedly fewer contentious issues remaining.
As for one of the main competitors to the dollar in the currency market, the British pound is being supported by expectations of another interest rate hike by the Bank of England after the release of April inflation data on Wednesday. According to statistics, consumer prices rose by 8.7% in annual terms in April, down from 10.1% in March, but core prices excluding food, energy, and tobacco accelerated to 6.8% last month from 6.2% in March.
British finance minister Jeremy Hunt reiterated on Wednesday the need to stick to the government’s plan to get inflation down in order to lower taxes. At the same time, Bank of England Governor Andrew Bailey stated on Tuesday at a meeting of the United Kingdom Parliament’s Treasury Select Committee (TSC) that the tool of interest rate hikes should be used carefully. In addition, he expressed concern about the risk of persistently high inflation (food prices increased by 19.0% in April).
Most economists believe that the Bank of England will continue to raise interest rates up to 5.5% (currently at 4.50%).
Today, GBP/USD traders should be guided by the dollar’s dynamic. It is worth paying attention to important macroeconomic statistics from the United States.
Better-than-expected figures will drive the greenback up. Conversely, worse-than-expected statistics may bring the dollar down in the short term.
It is also possible that investors will continue to lock in profits from long positions on the dollar ahead of the weekend. In this case, the US currency will extend losses today. On Monday, trading activity is expected to be sluggish as the macroeconomic calendar is empty due to Spring Bank Holiday in the UK, Memorial Day in the US, and the continued celebration of Pentecost in Catholic countries (it falls on Sunday, May 28).
From a technical point of view, the GBP/USD pair is trading within the zone of short-term and long-term bearish markets, while remaining above the key mid-term support levels of 1.2290 and 1.2245. A breakout of short-term resistance levels at 1.2417 and 1.2441 will bring the pair back into the zone of a medium-term bullish market.
The material has been provided by InstaForex Company – www.instaforex.com
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