GBP/USD flat lines around 1.2900 mark, below one-year peak touched on Thursday
-
GBP/USD
consolidates
the
previous
day’s
strong
move
up
to
a
one-year
peak. -
Rebounding
US
bond
yields
revive
the
USD
demand
and
cap
gains
for
the
pair. -
Reduced
August
BoE
rate
cut
bets
should
help
limit
any
meaningful
downfall.
The
GBP/USD
pair
seesaws
between
tepid
gains/minor
losses
around
the
1.2900
mark
during
the
Asian
session
on
Friday
and
remains
well
within
the
striking
distance
of
a
one-year
peak
touched
the
previous
day.
The
US
Dollar
(USD)
attracts
some
buyers
in
the
wake
of
a
goodish
pickup
in
the
US
Treasury
bond
yields
and
moves
away
from
a
nearly
three-month
low
touched
the
previous
day,
which,
in
turn,
acts
as
a
headwind
for
the
GBP/USD
pair.
Meanwhile,
the
softer
US
consumer
inflation
figures
released
on
Thursday
boosted
market
bets
for
an
imminent
start
of
the
Federal
Reserve’s
(Fed)
rate-cutting
cycle
in
September.
This
might
keep
a
lid
on
any
meaningful
upside
for
the
US
bond
yields.
Apart
from
this,
the
prevalent
risk-on
environment
might
hold
back
traders
from
placing
aggressive
bullish
bets
around
the
safe-haven
buck.
The
British
Pound
(GBP),
on
the
other
hand,
continues
to
draw
support
from
Thursday’s
data
showing
that
Britain’s
economy
grew
more
quickly
than
expected,
by
0.4%
in
May.
This
comes
on
top
of
the
recent
comments
by
the
Bank
of
England
(BoE)
policymakers
and
dashed
hopes
for
a
rate
cut
in
August.
In
fact,
the
BoE
MPC
member
Catherine
Mann
said
on
Wednesday
that
until
there
is
some
deceleration
in
services
prices,
she
is
not
in
favor
of
cutting
interest
rates.
Adding
to
this,
BoE
Chief
Economist
Huw
Pill
noted
that
there
is
still
some
work
to
do
before
the
domestic
persistent
component
of
inflation
is
gone.
The
aforementioned
fundamental
backdrop
seems
tilted
firmly
in
favor
of
bulls
and
suggests
that
the
path
of
least
resistance
for
the
GBP/USD
pair
is
to
the
upside.
Hence,
any
meaningful
corrective
decline
might
still
be
seen
as
a
buying
opportunity
and
is
more
likely
to
remain
limited.
Nevertheless,
spot
prices
remain
on
track
to
end
in
the
green
for
the
third
successive
week.
Traders
now
look
forward
to
the
release
of
the
US
Producer
Price
Index
(PPI)
and
the
University
of
Michigan
Consumer
Sentiment
survey,
due
later
during
the
North
American
session,
for
short-term
opportunities
on
the
last
day
of
the
week.
Pound
Sterling
FAQs
The
Pound
Sterling
(GBP)
is
the
oldest
currency
in
the
world
(886
AD)
and
the
official
currency
of
the
United
Kingdom.
It
is
the
fourth
most
traded
unit
for
foreign
exchange
(FX)
in
the
world,
accounting
for
12%
of
all
transactions,
averaging
$630
billion
a
day,
according
to
2022
data.
Its
key
trading
pairs
are
GBP/USD,
aka
‘Cable’,
which
accounts
for
11%
of
FX,
GBP/JPY,
or
the
‘Dragon’
as
it
is
known
by
traders
(3%),
and
EUR/GBP
(2%).
The
Pound
Sterling
is
issued
by
the
Bank
of
England
(BoE).
The
single
most
important
factor
influencing
the
value
of
the
Pound
Sterling
is
monetary
policy
decided
by
the
Bank
of
England.
The
BoE
bases
its
decisions
on
whether
it
has
achieved
its
primary
goal
of
“price
stability”
–
a
steady
inflation
rate
of
around
2%.
Its
primary
tool
for
achieving
this
is
the
adjustment
of
interest
rates.
When
inflation
is
too
high,
the
BoE
will
try
to
rein
it
in
by
raising
interest
rates,
making
it
more
expensive
for
people
and
businesses
to
access
credit.
This
is
generally
positive
for
GBP,
as
higher
interest
rates
make
the
UK
a
more
attractive
place
for
global
investors
to
park
their
money.
When
inflation
falls
too
low
it
is
a
sign
economic
growth
is
slowing.
In
this
scenario,
the
BoE
will
consider
lowering
interest
rates
to
cheapen
credit
so
businesses
will
borrow
more
to
invest
in
growth-generating
projects.
Data
releases
gauge
the
health
of
the
economy
and
can
impact
the
value
of
the
Pound
Sterling.
Indicators
such
as
GDP,
Manufacturing
and
Services
PMIs,
and
employment
can
all
influence
the
direction
of
the
GBP.
A
strong
economy
is
good
for
Sterling.
Not
only
does
it
attract
more
foreign
investment
but
it
may
encourage
the
BoE
to
put
up
interest
rates,
which
will
directly
strengthen
GBP.
Otherwise,
if
economic
data
is
weak,
the
Pound
Sterling
is
likely
to
fall.
Another
significant
data
release
for
the
Pound
Sterling
is
the
Trade
Balance.
This
indicator
measures
the
difference
between
what
a
country
earns
from
its
exports
and
what
it
spends
on
imports
over
a
given
period.
If
a
country
produces
highly
sought-after
exports,
its
currency
will
benefit
purely
from
the
extra
demand
created
from
foreign
buyers
seeking
to
purchase
these
goods.
Therefore,
a
positive
net
Trade
Balance
strengthens
a
currency
and
vice
versa
for
a
negative
balance.
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