Oct 31, 2022
VOT Research Desk
In early Monday AM Europe, the GBP/USD pair declines toward 1.1600 while breaking a three-week uptrend with slight losses.
The Federal Open Market Committee’s (FOMC) and the Bank of England’s (BOE) important monetary policy meetings this week may have contributed to the market’s recent weakness in the Cable pair (BOE). The conflicting feelings surrounding the quote are also probably a factor.
The mixed results of the US GDP and impending concerns that policymakers may hint at fewer rate hikes in December weigh on the GBP/USD values, despite the fact that Friday’s US inflation data reinforced worries that the Fed hawks may maintain control.
On the other hand, cautious confidence in the UK keeps the pair together, mostly because of the legitimacy of the new British government. However, the US Core Personal Consumption Expenditures (PCE) Price Index, the favored inflation indicator of the Fed, increased to 5.1% YoY for September compared to an expected 5.2% and a prior reading of 4.9%.
However, concerns about the US Federal Reserve (Fed(US) )’s slower rate hike beginning in December increased as the US private consumption fell for the fifth consecutive quarter.
In other markets, the closure of a casino resort in Macau and worries about Russia dominate a slow day and have an impact on the GBP/USD pricing. Following an attack on its Black Sea fleet, Russia, which invaded Ukraine on February 24, halted its participation in the Black Sea agreement on Saturday for an indefinite term, according to Reuters.
As a result, Russia could no longer guarantee the safety of civilian ships travelling under the agreement. It’s important to note that the most recent poll from Reuters indicated that the BOE would likely increase rates by more than 75 basis points on November 3.
That is down from nearly 100% bets for a full percentage-point leaP in the Bank Rate which were doused last week by new finance minister Jeremy Hunt when he revoked almost all of former Prime Minister Liz Truss’s tax cuts, the analytics on the same stated.
The article also makes reference to the odds when it states, but the delay of Hunt and new Prime Minister Rishi Sunak’s first budget plan until Nov.
17 will make it difficult for the BoE to explain its economic estimates.
The US 10-year Treasury yields fluctuate around 4.00% amid these man oeuvres after ending the 10-week upswing on Friday.
The uneven movements of the stocks, which come even as Dow Jones prepares for its highest monthly increase since 1976 and the US market futures record just modest losses, are another challenge for GBP/USD traders.
Moving on, the GBP/USD prices may have intermediate movements as a result of the second-tier US activity data, but the key focus will be on the BOE vs Fed actions.
The US jobs data for October, due out on Friday, will also be significant.
GBP/USD Technical Analysis
Although the most recent decline, GBP/USD bears may hold off on placing new orders until there is a definitive fall breach of the peak near 1.1495-90 from early October.
In the interim, investors should hold off until persistent trading above the 100-DMA resistance, perhaps above 1.1730.
Nevertheless, the RSI and MACD signs suggest that the pair is gradually recovering.
