GBP/USD rebounds swiftly from YTD low, retakes 1.2400 amid modest USD pullback By HareshMenghani GBPUSD BOE Fed RiskAversion Currencies
The recovery momentum pushed the spot prices to a fresh daily high, around the 1.2400 round-figure mark during the mid-European session.eased a bit from a two-decade high as investors opted to take some profits off the table. This, in turn, was seen as a key factor that assisted the GBP/USD pair to find some support ahead of the mid-1.2200s and stall its dovish Bank of England -inspired downward momentum.
Moreover, the BoE's gloomy economic outlook, saying that the economy was at the risk of a recession, suggested that the current rate hike cycle could be nearing a pause. The resultant policy outlooks between the Fed and the BoE might further hold back traders from placing aggressive bullish bets around the GBP/USD pair. Hence, any subsequent move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
In the absence of any major moving economic releases, either from the UK or the US, the US bond yields and the broader market risk sentiment would drive the USD demand. Traders will further take cues from a scheduled speech by the MPC member, Michael Saunders, which should influence the GBP and produce some trading opportunities around the GBP/USD pair. The focus, however, will remain on the release of the latest US consumer inflation figures on Wednesday.
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