GBP/USD trades with modest losses around mid-1.2000s, lacks follow-through selling – by hareshmenghani GBPUSD Fed Inflation Recession Currencies
ir is currently placed near the mid-1.2000s, just a few pips above the daily low, and seems vulnerable to extending last week's retracement slide from the vicinity of the 1.2200 mark.
A combination of supporting factors assists the US Dollar to reverse a modest intraday slide and hold steady near a one-high, which, in turn, is seen weighing on the GBP/USD pair. A more hawkish commentary by several FOMC members, including Fed Chair, back the case for further policy tightening by the US central bank. This, along with the prevalent risk-off environment amid looming recession risks, continue to act as a tailwind for the safe-haven greenback.
In fact, investors now seem convinced that the Fed will stick to its hawkish stance and the bets were reaffirmed by the incoming US macro data. Against the backdrop of a blockbuster US monthly jobs report, the Labor Department's annual revisions of CPI on Friday showed that consumer prices rose in December instead of falling as previously estimated. Separately, the University of Michigan survey's one-year inflation expectations climbed to 4.2% this month from the 3.9% previous.
This raises the risk of higher inflation print for January and dashes hopes for an imminent pause in the Fed's rate-hiking cycle. In contrast, the Bank of England is becoming increasingly unsure as to whether further policy tightening is warranted. It is worth recalling that
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