GBP/USD Extends Reversal from Three-Week High as BoE Hawks Retreat, US Dollar Gains
GBP/USD, the currency pair representing the British pound against the US dollar, continues its downward trajectory after reversing from a three-week high. The retreat in Bank of England (BoE) hawks, coupled with the US dollar's strength driven by escalating concerns of a Federal Reserve rate hike, has impacted the currency pair. Despite a light economic calendar in Asia and mixed sentiment, Pound Sterling traders remain uninspired. Intraday moves of the Cable will be influenced by the final readings of UK S&P Global PMIs and US ISM Services PMI for May. Let's delve into the details.
GBP/USD Maintains Bearish Pressure Below 1.2400
As Monday's London session commences, GBP/USD remains under pressure, hovering near 1.2400. The currency pair retraced from its three-week high and is now mildly offered around the intraday low of 1.2426. The market's uncertain momentum is reflected in the Cable's price action, mainly due to the absence of significant data/events and the Federal Reserve policymakers' blackout period leading up to the next week's Federal Open Market Committee (FOMC) meeting.
BoE Hawks Step Back Amid Lack of UK Data
The retreat of Bank of England hawks has contributed to the downward movement of GBP/USD. With a lack of major data releases in the UK, the momentum in the currency pair has been affected. As BoE policymakers take a step back, investors are adjusting their positions accordingly. The absence of substantial UK economic indicators limits the catalysts that could drive the pound higher.
US Dollar Strengthens on Escalating Fed Rate Hike Concerns
Meanwhile, the US dollar has gained strength as concerns over an imminent Federal Reserve rate hike escalate. The positive US Non-Farm Payrolls (NFP) report has boosted expectations of a tightening monetary policy by the Fed. This has attracted investors to the greenback, resulting in its appreciation against the British pound. The growing anticipation of higher interest rates in the United States has contributed to the downward pressure on GBP/USD.
Mixed Sentiment Fails to Inspire Pound Sterling Traders
Despite a mixed sentiment in the market, Pound Sterling traders remain uninspired. The lack of a clear direction and the absence of significant economic events have kept investors cautious. Uncertainty surrounding the UK's economic recovery, combined with the ongoing Brexit-related challenges, adds to the hesitation among traders. As a result, GBP/USD struggles to find meaningful bullish momentum.
Intraday Focus on UK S&P Global PMIs and US ISM Services PMI
Throughout the day, market participants will closely monitor the release of final readings of UK S&P Global PMIs and US ISM Services PMI for May. These economic indicators have the potential to generate intraday moves in the Cable. Any positive surprises in the UK data could offer some support to GBP/USD, while a robust US Services PMI might further strengthen the US dollar. Traders and investors will analyze these reports for insights into the economic health of both countries.
Conclusion
GBP/USD continues to face downward pressure as it extends the reversal from its recent three-week high. The retreat of Bank of England hawks, coupled with the US dollar's strength driven by concerns of a Federal Reserve rate hike, has influenced the currency pair's performance. Despite a light economic calendar in Asia and mixed sentiment in the market, Pound Sterling traders remain cautious. The final readings of UK S&P Global PMIs and US ISM Services PMI for May will be closely watched for intraday moves in GBP/USD. As the week progresses, the market's focus will shift to the upcoming Federal Open Market Committee meeting, where further insights into the Fed's monetary policy outlook may shape the direction of the Cable.