GBPUSD receives some dip-buying, but it struggles to build on its recent gains.
The GBPUSD pair demonstrates some resistance below the 100-day Simple Moving Average (SMA) and attracts dip-buyers near the over-a-month low reached earlier this week. Spot prices, on the other hand, have unable to profit on the upswing and are currently trading with only tiny intraday gains, hovering around the 1.2700 level.
Bets on further Fed rate cuts, as well as falling US bond yields, undercut and support the US dollar.
The US Dollar (USD) faces further selling pressure in the wake of Rising expectations for further interest rate cuts by the Federal Reserve (Fed), resulting in a new leg down in US Treasury bond yields. This, in turn, provides some support for the GBPUSD pair, albeit a weaker risk tone limits losses for the safe-haven dollar and works as a headwind.
Dovish BoE predictions and societal instability in the UK limit any advances for the GBP.
Market morale is weak as concerns increase about a Chinese economic downturn and a likely US recession. Aside from that, geopolitical uncertainties from ongoing conflicts in the Middle East dampen investors’ desire for riskier assets, which, combined with dovish Bank of England (BoE) predictions, constrain the GBP/USD pair.
In fact, the BoE cut interest rates for the first time in more than four years, from Last Thursday, the rate reached a 16-year high of 5.0%. The markets are also factoring in the probability of two more interest rate decreases before the end of the year. Aside from that, the ongoing disturbances in the United Kingdom should cause British Pound (GBP) bulls to exercise caution and position themselves for any potential upside in the GBP/USD pair.
There is no meaningful market-moving economic data due from the UK on Thursday, although the US economic calendar includes the customary Initial Weekly Jobless Claims later in the early North American session. This, together with US bond yields and broader risk sentiment, will fuel USD demand and provide some momentum to the GBPUSD.
