The GBPUSD pair has been under pressure since the lows of 2022 due to rising inflation and tensions in Ukraine. Central bank discrepancy led to the British Pound bulls to lose confidence.
The Cable increased for the second consecutive week, even though it was still far from its three-week high of 1.33. British Pound bulls took control on Tuesday after a shaky start to the new week, extending last week’s gains into early Wednesday, testing the psychological level of 1.3300.
As the US economy and jobs remain strong, the world’s most powerful central bank has also called for aggressive tightening. CME Fed Watch shows a 68.3% probability of a 50-basis point hike at May’s FOMC meeting following the radical reversal.
After Ukrainian President Volodymyr Zelenskyy was invited to address a NATO summit planned for Thursday, the US dollar increased, but sterling remained robust amid markets’ optimism over the Russia-Ukraine conflict. Further, Zelenskyy said they are prepared to discuss NATO membership and the post-ceasefire status of Crimea and Donbas.
The weekly Cable trend remains bearish as the Fed’s hawkishness put pressure on the risk asset while the Ukraine crisis also weakened the sentiment. ADP US employment data is due on Wednesday, followed by a speech from Bank of England Deputy Governor Ben Broadbent. In addition, the final revisions to US and UK GDP data are likely to catch the attention of investors. The US NFP and Bank of England report will be released next week, significant to watch.
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