GBP/USD sticks to modest intraday gains around mid-1.2200s, lacks follow-through – by hareshmenghani GBPUSD RiskAppetite Bonds Fed Currencies
Rising US bond yields act as a tailwind for the USD and keep a lid on any meaningful upside.The GBP/USD pair
builds on Friday's late intraday rebound from sub-1.2200 levels and gains some positive traction on the first day of a new week. The pair maintains its bid tone through the early part of the European session and is currently trading around mid-1.2200s, up nearly 0.15% for the day. A further recovery in the US Treasury bond yields is seen lending some support to the US Dollar and turning out to be a key factor acting as a headwind for the GBP/USD pair. That said, the Federal Reserve's signal that it might soon pause the rate-hiking cycle in the wake of the recent turmoil in the banking sector should cap any meaningful upside for the US bond yields.
News that First Citizens Bank & Trust Company will buy all of Silicon Valley Bank's deposits and loans from the Federal Deposit Insurance Corporation calmed market nerves about the contagion risk and boost investors' confidence. Traders, however, remain worried worries about a full-blown banking crisis. In fact, International Monetary Fund Chief Kristalina Georgieva warned over the weekend that risks to financial stability have increased.
In the absence of any relevant economic data, either from the UK or the US, the aforementioned mixed fundamental backdrop warrants some caution for aggressive traders and before placing fresh directional bets around the GBP/USD pair. That said, the Bank of England Governor Andrew Bailey's scheduled speech later during the US session might influence the British Pound and provide some meaningful impetus to the major.
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