- GBP/USD began the key week on a back foot, stays pressured of late.
- Market sentiment dwindles amid trader’s anxiety ahead of top-tier data/events.
- Mixed concerns surrounding UK’s tax cuts, workers’ strikes keep bears hopeful even as BoE hawks flex muscles.
- No major from Britain but US CB Consumer Confidence, Employment Cost Index may gain attention.
GBP/USD holds lower grounds after a two-day downtrend, making rounds to 1.2350 during early Tuesday morning in Asia. In doing so, the Cable pair takes clues from the broad US Dollar rebound as the market mood sours ahead of the key data/events. Adding strength to the quote’s from the key 1.2450 hurdle could be the economic problems and challenges for the UK policymakers.
At home, UK Treasury Secretary Jeremy Hunt’s indecision over the tax cuts and the economic complications due to the workers’ strikes weigh on the GBP/USD prices. Even so, the policymakers propose the fight to tame inflation as a cure to overcome the workers’ halting of workers and generate problems surrounding the same, including higher inflation and low productivity.
On the other hand, the US Dallas Fed manufacturing index for January jumped to -8.4 while adding 11.6 points and marking the highest reading since May 2022.
Not only the downbeat US data but firmer US Treasury bond yields and softer equities also weighed on the GBP/USD prices. That said, the US 10-year Treasury bond yields rose 2.4 basis points (bps) to 3.542% while Wall Street benchmarks closed in the red.
It’s worth noting that China’s return from a week-long Lunar New Year (LNY) holiday also couldn’t impress markets as traders received mixed signals surrounding the dragon nation’s economic transition during the holiday period, which in turn weighed on the risk appetite and the GBP/USD prices.
Having witnessed a sluggish start to the key week, mostly favoring the GBP/USD bears, the pair traders will pay attention to today’s US Conference Board Consumer Confidence gauge for January. Also important will be the fourth quarter (Q4) Employment Cost Index (ECI). That said, the Cable pair may witness a comparatively more active day than the previous one but a cautious mood can keep challenging the traders ahead of the monetary policy meeting of the US Federal Reserve (Fed) and the Bank of England.
Technical analysis
The GBP/USD pair’s failure to cross the 1.2450 hurdle joins the clear downside break of the three-week-old ascending trend line, around 1.2370 by the press time, to direct the Cable bears towards the 21-DMA support near 1.2250.