GBP/USD under pressure on US debt ceiling woes, ahead of the Fed’s decision – by christianborjon GBPUSD Currencies Majors
, while the US debt ceiling theme, take the spotlight ahead of the Federal Reserve decision. At the time of typing, the GBP/USD is trading at around the 1.2470-80 areas after dipping towards 1.2435.Sentiment deteriorated, even though JP Morgan acquired the First Republic Bank on Monday. The US bank crisis continues, as the KBW Regional Banking Index, dropped more than 6%, at its lowest level since November 2020.
The GBP/USD dropped on a risk-off impulse, triggered by the US Secretary of Treasure Janet Yellen commenting that her office would not meet all the US government obligations by the beginning of June, wrote in a letter to the US Congress. Nevertheless, the GBP/USD’s fall was cushioned, as data from the United States revealed by the Bureau of Labor Statistics flashed that job openings for March dropped to 9.590 million, below estimates of 9.775 million, according to the JOLTs report. At the same time, the US Department of Commerce revealed that Factory Orders increased by 0.09% MoM, exceeding estimates and distancing from February’s drop of 1.1%.
On the UK front, British factory output and new orders contracted at the beginning of Q2, though the report showed that input costs rose to their weakest level since May 2020. In the meantime, the GBP/USD uptrend might stall as investors brace for the Fed’s May meeting that ends on Wednesday. Money market futures odds for a 25 bps rate increase are 87.3%. Nevertheless, traders estimate three rate cuts by the end of 2023, contrary to expectations for further tightening by the Bank of England After dipping to a weekly low of 1.2435, the GBP/USD found support at the 20-day Exponential Moving Average at 1.2437.
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