GBP/USD slowly – increases to about 1.1145-50 as attention is kept on the US CPI report.

Oct 13, 2022
VOT Research Desk

Market Insights and Analysis

For the second day running, GBP/USD sees some purchasing amid a little decline in the value of the US dollar.

The urge to take risks weakens the safe-haven dollar and lends some support to the major.

As the attention remains on the US CPI, aggressive Fed rate rise bets should keep the USD losses to a minimum.

Bulls should exercise care due to the BoE’s emergency bond-buying program’s confusion.

On Thursday, the GBP/USD pair reaches a fresh daily high during the first half of the European session and attracts some buying in the vicinity of the 1.1050 area. The pair is up for the second day in a row and is trading just above the middle of the 1.1100s. It may be looking to build on the positive recovery from a nearly two-week low the day before.

The GBP/USD pair gains support thanks to the US dollar, which has fallen for the second day in a row. The safe-haven greenback is being undermined by a recovery in global risk sentiment, as evidenced by a generally upbeat tone in the equity markets. Aside from this, the USD decline has no obvious cause and is likely to remain limited in light of Fed expectations that are hawkish.

The markets appear to be persuaded that the US central bank will continue its aggressive policy tightening, and they have been anticipating a massive 75 basis points rate increase in November. The FOMC meeting minutes, which were released on Wednesday, showed that officials were committed to raising interest rates to reduce inflation. This confirmed the bets. This still backs higher yields on US Treasury bonds.

As a result, the latest US consumer inflation figures, due later in the early North American session, continue to hold the market’s attention. The US CPI report, which is very important, will be looked at to find out how much the Fed will raise interest rates next. This, in turn, will have a significant impact on the USD price dynamics in the near future and give the GBP/USD pair a fresh push in the right direction.

In the meantime, there are concerns about the UK government’s fiscal plans, so the possibility that the Bank of England will end its program of temporary gilt purchases on Friday could hurt sterling. Before placing bullish bets on the GBP/USD pair, it is important to note that the new UK government has stated that it will not reverse its massive tax cuts or reduce public spending.

Crucial Levels to Watch

GBP/USD