GBP/USD edges higher after BoE announces additional measures, lacks any follow-through – by hareshmenghani GBPUSD BOE FiscalPolicy Fed Currencies
Concerns about the UK government’s fiscal plans, recession fears could act as a headwind.The GBP/USD pair
stalls its recent sharp pullback from the vicinity of the 1.1500 psychological mark and attracts some buying on the first day of a new week. Spot prices edge higher through the early European session and climb back above the 1.1100 mark, though lack bullish conviction.announces the launch of the Temporary Expanded Collateral Repo Facility to support market functioning. This, in turn, provides a modest lift to the British pound and assists the GBP/USD pair to rebound over 50 pips from the 1.
The US dollar, on the other hand, remains firm amid firming expectations that the Federal Reserve will stick to its aggressive rate hiking cycle to tame inflation. In fact, the markets are pricing in over 80% chances of another supersized 75 bps Fed rate hike move for the fourth consecutive meeting in November. The bets were reaffirmed by the recent hawkish comments by several Fed officials and Friday's upbeat US jobs data.
Apart from this, the prevalent risk-off environment continues to act as a tailwind for the safe-haven greenback and contribute to capping gains for the GBP/USD pair, at least for the time being. Theremains fragile amid worries about economic headwinds stemming from rapidly rising borrowing costs and geopolitical risks. This, along with US-China trade jitters, tempers investors' appetite for riskier assets.
In the latest development, the White House unveiled export controls cutting off Chinese companies from certain semiconductor chips made with US equipment. Market participants turned cautious amid worries that any retaliation from China will worsen trade ties between the world's two largest economies and have deeper economic implications. This should continue to underpin the USD and keep a lid on the GBP/USD pair.due for release on Monday.
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