- The GBP/USD pair fluctuated in a tight range for the second straight day on Friday.
- The Fed’s hawkish expectations supported the US dollar and limited its growth.
- Investors, however, chose to wait on the sidelines ahead of the release of a key US employment report.
The GBP/USD outlook remains bearish as the risk sentiment has deteriorated amid Russia. Meanwhile, the Fed hawks keep a lid on the gains.
The GBPUSD pair is at 1.3120, down 0.08% at writing.
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Domestic data
The GBP/USD pair has struggled to maintain the gains over the last three trading sessions. Although the better than expected UK GDP helped pause the bears on Thursday, there is no follow-through buying to retain the momentum. On the other hand, the Bank of England’s tone is not aggressive over raising the rates, keeping the GBP/USD bids on the backfoot.
Greenback recovers
The US dollar found support near the two-week bottom and started recovering yesterday. The fading hopes of Russia-Ukraine peace talks have resulted in an inflow of capital to the greenback because of its safe-haven appeal.
Moreover, the Fed’s expectations of a 50-bps rate hike are keeping the losses in the US dollar limited. In fact, the markets are preparing for a 100-bps rate hike in the coming two meetings of the FOMC as inflation has been on the rise. However, the preferred measure for inflation, the core PCE index data released yesterday, rose to 5.4% from 5.2% for February, while the expected figure was 5.5%.
What’s next for the GBP/USD?
The US dollar remains strongly bullish. However, the market participants are reluctant to bet aggressively as the monthly US non-farm payrolls data is due on the day. In addition, the US NFP report will definitely impact the decision of the Fed regarding the rate hikes. Moreover, the risk catalysts like the Russia-Ukraine crisis should be closely watched to find fresh impetus for trading.
GBP/USD outlook via daily open interest
The GBP/USD price slightly gained yesterday while the open interest rose significantly. It indicates that the pair is slightly on the bullish side.
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GBP/USD price technical outlook: Bulls find no respite
The GBP/USD price is around the 20-period SMA, just above the 1.3100 handle. The outlook is not quite encouraging for the bulls. If the pair slips below 1.3100, we may dip towards the previous swing low of 1.3060 ahead of the double bottom at 1.3000.
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Saqib Iqbal
