GBP/USD Analysis Report: As the risk-off momentum has recovered, the GBPUSD has continued its rise over 1.1200.

Nov 04, 2022

VOT Research Desk

After overcoming the round-level resistance of 1.1200 in the Tokyo session, the GBPUSD pair has gained fresh gains.

The Cable has since moved back up from 1.1150 after losing its downward momentum. Investors are shrugging off uncertainties in front of the US Nonfarm Payrolls (NFP) report, which is turning the risk impulse positive.

The US dollar index (DXY), meantime, has fallen below 112.60 after struggling to overcome the critical threshold of 113.00. The S&P500 futures have seen a slight comeback after trading in a range.

While falling to 4.14%, the 10-year US Treasury yields have given up most of their gains. After the Bank of England (BOE) announced a rate increase of 75 basis points on Thursday, the bulls in the pound experienced a sharp decline (bps).

The decision was still in line with expectations, but BOE Governor Andrew Bailey’s remarks about the UK’s recession situation caused the Sterling to decline.

The BOE Governor acknowledged that the UK economy is in a recession and that it may extend two years longer than was typical during the subprime crisis.

The recessionary environment suggests a slowing of economic activity, therefore the BOE will be restrained from raising interest rates further. This might cause the Federal Reserve’s (Fed) and the BOE’s policy divergences to grow in the future.