GBP/USD stays mildly bid below 1.1650 as BOE postpones meeting, UK data, US inflation eyed
- GBP/USD remains sidelined after crossing the short-term key resistances.
- Mixed sentiment, pre-data anxiety and China’s off restrict the Cable pair’s latest moves.
- BOE delayed monetary policy meeting by a week on Queen’s death.
- Monthly prints of UK data, US inflation will be crucial for short-term directions.
GBP/USD grinds higher around 1.1625-30 as traders brace for the UK’s data-filled week during early Monday. Even so, softer US dollar and hopes of faster rate hike from the Bank of England (BOE), mainly due to Liz Truss’ election as the UK Prime Minister (PM), seems to keep the buyers hopeful. It should be noted that a week’s delay by the BOE in its monetary policy decision also seems to restrict the Cable pair’s latest moves.
BOE delays monetary policy announcement to September 22 as the nation mourns over the death of the Queen Elizabeth II. Not only the “Old Lady”, as the BOE is sometimes called, but majority of the UK activities are likely to be compressed during September, which in turn raises economic fears for the already struggling London and challenge GBP/USD buyers.
Additionally, fresh geopolitical and trade headlines surrounding China and Russia seems to probe the previous risk-on mood, mainly backed by the hopes that the inflation is easing and the policymakers will be able tackle the economic crisis. US President Joe Biden is ready to hit China with broader curbs on US chip and tool exports seem to restrict the previously upbeat market sentiment. On the same line could be the analysis suggesting a 20-year low oil demand from China due to covid curbs, shared by Reuters. It’s worth mentioning that the fears emanating from the Russia-Ukraine crisis, due to Moscow’s retreat, are also a risk-negative catalyst.
Elsewhere, comments from US Treasury Secretary Janet Yellen and some of the prominent Fed policymakers could also be considered a hurdle for the GBP/USD prices. US Treasury Secretary Janet Yellen mentioned that, during the CNN interview on Sunday, “Fed is going to need skill and luck to bring inflation down while maintaining labor market strength.” The policymaker also mentioned that US consumers could experience a spike in gas prices in winter when the European Union significantly cuts back on buying Russian oil.
Federal Reserve Governor Christopher Waller was the prominent one as he said on Friday that he supports another significant hike in two weeks. On the same line was Kansas City Fed President Esther George who said, as reported by Reuters, “Case for continuing to remove policy accommodation is clear cut.” Furthermore, Cleveland Federal Reserve Bank President Loretta Mester said, “One inflation report is insufficient to alter one's outlook.” The policymaker also stated that he sees policy rates rising slightly above 4% by early 2023.
Amid these plays, the S&P 500 Futures struggle to extend the three-day uptrend around a fortnight top, easing from the intraday high of 4,094.50 of late. On the same line are the US 10-year Treasury yields, down one basis point (bp) to 3.31% at the latest.
Moving on, the UK’s key monthly statistics for July, namely Industrial Production, Gross Domestic Product (GDP) and Manufacturing Production, will be important for the GBP/USD traders for immediate directions. However, major attention will be given to the UK’s employment and inflation statistics, as well as the US Consumer Price Index (CPI) for August, for a clear view.
Technical analysis
GBP/USD bulls cheer the upside break of the 10-DMA and monthly bearish channel amid the recently firmer RSI (14) and the strongest bullish MACD signals to aim for the 21-DMA hurdle surrounding 1.1700 ahead of the UK’s key monthly statistics for July.
In case of an alternative move, the 10-DMA resistance-turned-support, around 1.1555 by the press time, will precede the stated bearish channel’s upper line, close to 1.1500 at the latest, to restrict short-term downside.