Shedding Off to a New Low

The GBP/USD pair shed part of its gains the intraday and dropped to a month’s low. It was seen trading close to the 1.2625 to 1.2620 zones. It, therefore, gained a 0.25% increase in the course of the early European session.

The pair had some positive traction on its third consecutive day during Friday’s trade. It equally makes a sixth straight day of positive momentum in the last seven days. It, thus, verified a bullish break going through the 1.2600 benchmarks.

GBP/USD price chart. Source TradingView

The energy boosted the price of spots to the highest point it has seen since 26th April. It was supported by biased sales around the US Dollar that have overshadowed the market. 

The minutes of the FOMC published on Wednesday gave an impactful revelation to the market. There was an air around it that the Fed might halt its interest rate cycle. The halt might come after implementing 50 basis point raises in June and July.

The halt would be coming in the midst of the deteriorating global economic conditions. The market’s guesses were escalated by preliminary US GDP data released on Thursday. The data revealed that the country’s economy shrank by a 1.5% annual rate in quarter one.

The Fed’s Capacity is in Doubt

The market doubts that the Fed is able to control inflation without resulting in recession. This led to the continued fall of the US Treasury bond yields. The yields on the ten-year government bond dropped to a six-week low.

The above situation has pulled the US Dollar down to a month’s low point. The market’s risk-on sentiment has also done the same to the US Dollar.

Disappearing possibilities for further rate increases from the BOE became a headwind for the Pound. The impasse between the UK and EU over the NIP is causing a headwind. This was the lone condition that stopped bulls from placing their aggressive bets.

The British conditions above also caused the GBP/USD pair’s intraday loss. The pair pulled back from about 40 pips away from its daily high.

Since there are no relevant economic publications from the UK, the pair is left to the US Dollar. The dynamics around the US Dollar will influence the GBP/USD pair’s growth. 

The North American session would see the publication of the central PCE Price Index. The PCE Price Index is the preferred inflation measure of the Federal Reserve. It could let traders get opportunities to trade in the near term.