GBPUSD stays firmer after rising the most in 2024 amid sluggish US Dollar, hawkish BoE bias

Trading sentiment remains slightly positive early Wednesday amid an absence of hawkish Fed talks, as well as due to the lack of major risk-negative headlines. Also keeping the market players hopeful are recent activity data from the top-tier economies as most figures suggest an increase in services activities contributing toward overall improvement, as well as price pressure.

It’s worth noting, however, that downbeat US data and a two-week-long Fed blackout weigh on the US Dollar even as a corrective bounce in the yields put a floor under the Greenback of late.

With this, EURUSD pares the biggest daily jump in a week amid dovish European Central Bank (ECB) bias whereas the GBPUSD lacks clear directions after rising the most on a day since December 2023. Further, USDJPY ticks up to refresh the 34-year high but remains dicey amid mixed signals surrounding the Bank of Japan’s (BoJ) next move and unimpressive data from Japan.

AUDUSD jumps the most among the G10 currency pairs amid strong Aussie inflation data whereas NZDUSD follows suit amid improvement in New Zealand (NZ) trade balance numbers. Moving on, USDCAD prints the first daily gain in six while bouncing off a two-week low despite firmer prices of Canada’s main export item, namely crude oil.

Further, Gold price recovers from 21-SMA to snap a two-day losing streak while Crude Oil remains on the front foot for the third consecutive day.

BTCUSD picks up bids to reverse the previous day’s retreat from the weekly high while ETHUSD rises for the third consecutive day despite looming concerns that the US SEC will delay spot Ethereum ETF approvals. The optimism on the crypto front could also be linked to the news suggesting BRICS is considering launching stablecoin for international trade settlement.

Following are the latest moves of the key assets:

• Brent oil rises for the third consecutive day, mildly bid near $88.50 at the latest.
• Gold recovers from a two-week low to $2,325 by the press time.
• The USD Index pares the biggest daily loss in a week by posting minor gains around 105.85.
• Wall Street closed with minor gains and so did the Asia-Pacific stocks. Further, European and UK shares print mild gains during the initial trading hour.
• BTCUSD and ETHUSD both rise nearly 1.0% each intraday to around $66,800 and $3,260 at the latest.

US Dollar licks its wounds amid sluggish session…

The US Dollar Index (DXY) prints a corrective bounce from the two-week low, after falling heavily the previous day, as market players await the US Durable Goods Orders for March.

On Tuesday, the Greenback dropped the most in a week while bearing the burden of the downbeat S&P Global PMIs for April, as well as New Home Sales for March. Further, an absence of speeches from the Federal Reserve (Fed) officials due to a two-week blackout period ahead of next week’s FOMC, also exerts downside pressure on the US Dollar. Additionally, a short-term stabilization in the Middle East, as well as a lack of risk-negative headlines from China and Russia, also restrict the market’s rush toward the US Dollar due to the currency’s haven appeal.

While the US Dollar dropped, the Euro benefited from upbeat PMIs for Germany and the bloc. However, the ECB officials struggle to push back dovish bias about the region’s central bank and hence the EURUSD pares the latest gains. That said, President of the Deutsche Bundesbank, Member of the Governing Council of the ECB Joachim Nagel said that he needs to be convinced that inflation is heading back to target before cuts. On the other hand, ECB vice president, Luis de Guindos confirmed the June rate cut by saying, “Barring any surprises, June rate cut is a 'fait accompli'.”

Elsewhere, GBPUSD marked a notable run-up on Tuesday, the most in 2024, as upbeat UK PMIs joined hawkish comments from the BoE officials. Among the BoE hawks, are Chief Economist, Huw Pill and policymaker Jonathan Haskel. It should be noted that a Reuters poll suggests 31 of 63 analysts expect the BoE rate cut starting from June, which in turn joined doubts about the UK’s economic transition to weigh on the Cable.

USDJPY fails to cheer upbeat Japan Services PPI, as well as the Cabinet Report expects a moderate economic recovery, amid mixed bias about the BoJ’s next move after the first rate hike in years.

AUDUSD prints a three-day uptrend while refreshing a weekly top as Australia’s quarterly inflation numbers push back concerns about the RBA’s rate cuts. On the same line, the upbeat New Zealand Trade Balance allowed NZDUSD to remain firmer, especially amid the market’s cautious optimism.

That said, the US Senate passed a $95 billion bill to provide aid to Ukraine, Israel, and Taiwan. The news should have challenged the market’s positive sentiment late Tuesday but failed to gain momentum amid the absence of any response from Russia, China, and the Middle East. Further, the US FBI Director Christopher Wray expressed elevated fears about a terrorist attack like that seen in Russia.

It should be observed that the Gold price failed to cheer the US Dollar’s weakness and dropped to a two-week low amid the market’s lack of conviction. However, the firmer sentiment allowed the XAUUSD to rebound of late. Meanwhile, Crude oil remains firmer for the third consecutive day amid a likely increase in energy demand, due to the broadly firmer PMIs, as well as Tuesday’s private inventory data, showed a higher draw.

• Strong buy: USDCAD, USDJPY, US Dollar
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, EURUSD

US Durable Goods Orders, Canada Retail Sales eyed…

Although an absence of Fed talks will restrict the market moves, the US Durable Goods Orders for March and Canada Retail Sales for February will offer intermediate moves. That said, while firmer US data could allow the US Dollar to pare recent losses and challenge the recoveries of the commodities and Antipodeans, the Canadian Dollar (CAD) might not cheer the strong Canadian Retail Sales unless posting extremely upbeat data, due to the BoC’s dovish bias. On a different page, the risk headlines surrounding Russia, China, and the Middle East could also help the US Dollar to regain.

May the trading luck be with you!