GBP/USD Dips on Greenback Confidence Amidst Fed Tightening Signa

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GBP/USD Dips on Greenback Confidence Amidst Fed Tightening Signals

The GBP/USD pair experiences a downturn, marking a 0.35% decline after reaching a peak at 1.2734. The US core Personal Consumption Expenditure (PCE) inflation cools down to 3.5% YoY in October, signaling a potential near-peak in the Federal Reserve's (Fed) tightening cycle. Despite a slight reduction in Fed rate-cut expectations, US Treasury bond yields rise, with the 10-year note increasing by six basis points to 4.32%.

The Bank of England (BoE) is anticipated to maintain higher rates due to persistent high inflation, with BoE officials maintaining a hawkish stance throughout the week.

In Thursday's North American session, the GBP/USD drops as the Greenback receives a vote of confidence from traders. Despite indications that the Fed might be nearing the peak of its tightening cycle, the pair is trading at 1.2652, down 0.38% after reaching a high of 1.2710. A pullback in the H4 timeframe sees a retest of the 50% - 61.8% Fibonacci area, hinting at a possible deeper retracement.

The decline in GBP/USD is attributed to rising US bond yields, driven by investors repricing expectations for a less-dovish Fed.

From a technical standpoint, our analysis suggests a bearish impulse after the retest of the 50% - 61.8% Fibonacci area, with a potential target at 1.2590.




Our preference

Short positions below 1.27450 with targets at 1.2590 & 1.25250 in extension.