- GBP/USD sustains earlier losses in the Asian session.
- Higher US Treasury yields lift the demand for the USD.
- Initial Jobless claims, Gross Domestic Product (GDP) eyed.
The fresh buying opportunities in the US dollar keep GBP/USD on the edge on Thursday. The pair opened above the 1.4120 mark but failed to sustain, albeit retreated quickly to touch the intraday low at 1.4092.
At the time of writing, the GBP/USD pair is trading at 1.411, down 0.06% for the day.
The major theme remains the central banks and the inflationary pressure. The US benchmark 10-year yields rose to 1.58% with 0.43% gains for the day.
Investors dumped riskier assets in anticipation of rising interest rates after Fed Vice Chair Richard Clarida said that the central bank could handle the inflationary pressure avoiding the country’s economic recovery. The twist came in when he added that the Fed should start talking about tapering in the next coming meetings.
The latter comment deviated from the earlier officials’ dovish stance that boosted the US Treasury yield, having the cascading effect on the US dollar which rose from its lowest level in four months.
On the other hand, the sterling remained the second best performing G-10 currency, after CAD on upbeat economic data and a faster vaccination program. The re-opening of the economy further boosted cable optimism. The Bank of England (BOE) Governor Andrew Bailey, echoed a similar tone over the interest rates and asset purchasing program.
Lately, the Brexit woes remain a risk factor for the performance of the cable. As per the latest report, the UK construction sector could face delays post-Brexit certification scheme. This could derail the economic recovery pace in the country.
Meanwhile, serious allegations were made by UK Prime Minister Boris Johnson’s close aide Dominic Cummings, who quit the Boris administration last November. He criticized the government heavily as he quoted” When the public needed us most the government failed”. He was extremely critical of the Prime Minister’s efforts in handling the crisis.
This cites the internal rifts in the UK political sphere, which impacted sterling negatively.
As for now, investors turn their attention to the US economic docket with Gross Domestic Product (GDP), Durable Goods, Corporates Profits, and Initial Jobless Claims on tap.
The data will help in gauging the market sentiment, as higher reading could influence the Fed rate hike decision.
GBP/USD Additional Levels
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