Market Analysis

GBPUSD recovers from its year-to-date low, steadily approaching the 1.2400 barrier

Amos Simanungkalit · 22 Apr 202410.1K Views

The GBP/USD pair has shown a slight rebound from the 1.2365-1.2360 range, marking its lowest point since November 14, which occurred during Monday's Asian session.

This recovery halts a two-day decline, with the pair edging closer to the 1.2400 level supported by a modest dip in the US Dollar (USD). However, significant upward movement remains elusive.

Iran's indication that it won't retaliate against Israel's limited missile strike on Friday has eased concerns of further Middle East tensions. This boosts investor confidence, weakening the safe-haven USD and aiding the GBP/USD pair.

Meanwhile, expectations of the Federal Reserve (Fed) maintaining higher rates due to persistent US inflation somewhat limit USD downside, potentially capping gains for the GBP/USD pair.

Investors have postponed expectations for Fed rate cuts to September and reduced their forecasts for the number of cuts this year. This hawkish stance keeps US Treasury yields elevated, supporting the USD. Additionally, speculation about aggressive policy easing by the Bank of England (BoE) could restrain further GBP/USD appreciation.

With no significant economic releases from the UK or US on Monday, the pair's movement depends on USD dynamics. Attention shifts to key US data later in the week, including the Advance Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index on Thursday and Friday. Flash PMI prints from the UK and US could also influence the GBP/USD pair.