- GBP/nt decline in the US bond yields and a positive risk tone weighed on the safe-haven buck.
- Hawkish Fed expectations should limit any further USD losses and cap the upside for the major.
The GBP/USD pair built on its modest intraday gains and climbed to a fresh daily high, around the 1.2275-1.2280 region during the mid-European session.
Against the backdrop of the post-FOMC slide in the US Treasury bond yields, a generally positive risk tone exerted some downward pressure on the safe-haven US dollar on Monday. This, in turn, was seen as a key factor that assisted the GBP/USD pair to regain positive traction and recover a part of Friday's losses. That said, any meaningful recovery move still seems elusive, warranting caution for aggressive bullish traders.
Investors remain concerned that a more aggressive move by major central banks to curb inflation would pose challenges to global economic growth. This should keep a lid on any optimistic move in the markets, which, along with hawkish Fed expectations should act as a tailwind for the buck. In fact, the markets seem convinced that the US central bank would hike interest rates at a faster pace to tame soaring inflation.
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