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The Pound Sterling (GBP) discovered intermediate support as investors started digesting the potential risks of global economic turmoil due to restrictive monetary policy by Western central bankers. The GBP/USD pairfinds an intermediate cushion, but the broader bias remains bearish as investors expect that policy divergence between the Federal Reserve (Fed) and the Bank of England (BoE) may not vanish this month.
BoE policymaker Swati Dhingra warned that current monetary policy is “sufficiently restrictive” and that more hikes could hurt the UK economy. The narrative of keeping interest rates steady in coming months got support from BoE Governor Andrew Bailey, who conveyed that the interest rate peak is near. Higher wage growth due to labor shortages has been a driving factor in stubborn UK inflation. Therefore, investors would shift focus to the Employment report for July, which will be published on Tuesday.
Pound Sterling attempts a recovery on Friday after a three-day negative closing spell as investors start digesting fears of global uncertainty. The broader downside of the Cable remains weak as it is struggling to remain above the 200-day Exponential Moving Average (EMA), which is around 1.2500. The 20 and 50-day EMAs have started declining, indicating strength in Cable bears’s determination. Momentum oscillators indicate that the bearish impulse has firmed significantly.
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