GBP USD

GBP/USD rises as the UK economy grew fast than expected in 2022, US inflation data is up next. EUR/USD rises ahead of inflation data.

With GBP/USD sentiment so poor, and major US economic data arriving later this week, conditions look ideal for a countertrend squeeze over the coming days.

Welcome to another edition of Forex Friday, a weekly report in which we highlight selected currency themes. In this week’s report, we will focus the US dollar, EUR/USD and GBP/USD. The dollar index eyes March high and set to close higher for 10th consecutive week, with BoJ inaction and rising crude oil prices providing additional boost for greenback.

GBP/USD falls for a third day as economic worries rise, PMI data is due. DAX struggles ahead of PMI data.

Earlier, the Bank of England announced interest rates would be kept unchanged in a surprise move (not to us) and the pound took another plunge, dropping below 1.2250 in initial reaction. The BoE’s policy statement was somewhat hawkish and the MPC split. This means that the next few policy decisions could be close calls, especially if inflation doesn’t come down fast enough.

Only a ‘hawkish hike’ from the Bank of England (BoE) is likely to be enough to turn around the fortunes of GBP/USD given rapidly weakening fundamentals.

GBP/USD falls after inflation unexpectedly cools. USD/JPY trades at the 2023 high ahead of the FOMC rate decision.

Implied volatility levels are unsurprisingly elevated for forex pairs today, given we have a key UK inflation report up shortly and the FOMC meeting and press conference in just over 12 hours. Today we look at the intraday charts for EUR/USD, GBP/USD and WTI crude oil.

GBP/USD falls after UK GDP contracts and ahead of US CPI. Oil rises after OPEC’s report & with EIA stockpile data due.

GBP/USD struggles around 1.25 despite record wage growth. EUR/USD falls towards 1.07 ahead of German ZEW economic sentiment data.

GBP/USD looks like it is trying to carve out a swing low ahead of today's employment and wages report, whilst the FTSE 100 has rallied into a key area of resistance.

Sticky wages growth is one of the few positives for GBP/USD right now, keeping the prospect for rate hikes from the BOE in play.

EUR/USD rises but is set to fall across the week as the economic outlook deteriorates. GBP/USD rises but remains below 1.25 as the BoE nears peak rates.

GBP/USD looks to BoE Bailey’s hearing before the Treasury Select Committee. DAX falls as the economic outlook deteriorates.

GBP/USD is rising on USD weakness. However, fears that the BoE could hike the UK into recession could limit the upside.

It is also worth noting that the 2-year yield printed a bearish engulfing week after a failed attempt to break and hold above 5%. And if yields continue to move lower over the coming weeks, it will likely weigh on the US dollar. Large speculators are slowly loosening their bullish grip on GBP/USD futures, with short exposure rising by 25% last week. Traders are also showing renewed bullish interest in gold and silver.

GBP/USD looks to US data for clues on the Fed’s next move. EUR/GBP holds steady ahead of German inflation.