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British Pound Weakens Below 1.3250 as USD Strength Persists
Confirmed
In Short: The British pound weakened below 1.3250 against the US dollar on Wednesday, amid expectations of a steady Federal Reserve policy stance.
The British pound weakened further below 1.3250 during the first half of the European session on Wednesday, eroding gains from the previous day amid a broadly firmer US dollar.
According to ING, the US Dollar Index (DXY) is expected to remain in a range of 101.50 to 101.80, but an upside breakout is possible if US economic data surprises positively or if European government debt sells off heavily.
The pound's weakness was exacerbated by the September non-farm payrolls report, which showed a significant shortfall of 29,000 jobs, far below the consensus forecast of around 90,000.
The weak report prompted a sharp retreat in Treasury yields and reduced expectations that the Federal Reserve will raise rates again in October.
The GBP/USD pair remains confined within a range of 1.3205 to 1.3345, as traders await the release of the Federal Open Market Committee (FOMC) minutes for further cues on the Fed's policy path.
Prime Minister Andy Burnham and Chancellor John Healey face a major challenge from rising gilt yields, which could complicate their spending and borrowing plans.
In the latest developments, Saudi-backed Yemeni government forces claimed control over strategic points along the Red Sea coast, including areas around the Bab al-Mandeb Strait.
Analysts suggest that the pound could retest the 1.3285 level, with support at 1.3240 and 1.3220.
The British pound's recovery against the New Zealand dollar is expected to continue, but the market is not ready to trend meaningfully.
What this adds
The September non-farm payrolls report was a significant factor in the pound's weakness, underscoring the impact of economic data on currency movements.
What's confirmed
- The British pound weakened further below 1.3250 during the first half of the European session on Wednesday, eroding gains from the previous day amid a broadly firmer US dollar.
- According to ING, the US Dollar Index (DXY) is expected to remain in a range of 101.50 to 101.80, but an upside breakout is possible if US economic data surprises positively or if European government debt sells off heavily.
- The pound's weakness was exacerbated by the September non-farm payrolls report, which showed a significant shortfall of 29,000 jobs, far below the consensus forecast of around 90,000.
- The weak report prompted a sharp retreat in Treasury yields and reduced expectations that the Federal Reserve will raise rates again in October.
- The GBP/USD pair remains confined within a range of 1.3205 to 1.3345, as traders await the release of the Federal Open Market Committee (FOMC) minutes for further cues on the Fed's policy path.
- Prime Minister Andy Burnham and Chancellor John Healey face a major challenge from rising gilt yields, which could complicate their spending and borrowing plans.
- In the latest developments, Saudi-backed Yemeni government forces claimed control over strategic points along the Red Sea coast, including areas around the Bab al-Mandeb Strait.
- Analysts suggest that the pound could retest the 1.3285 level, with support at 1.3240 and 1.3220.
- The British pound's recovery against the New Zealand dollar is expected to continue, but the market is not ready to trend meaningfully.
What's still developing
- According to UoB; "GBP has likely entered a range-trading phase, expected to be between 1.3205 and 1.3345."
- Spot prices, however, remain confined in a familiar range held over the past two weeks or so as traders keenly await the release of FOMC Minutes before placing fresh directional bets.