20 February 2024, GBP/USD
Event to watch out for today:
12:15 EET. GBP - Parliamentary hearing on the Bank of England's Monetary Policy Report
GBPUSD:
The GBP/USD pair continues to trade at around 1.2580 during the Asian session on Tuesday. The strengthening of the US dollar can be attributed to an increase in the US Treasury bond yields, which in turn has an impact on the GBPUSD pair. Traders await the minutes of the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday.
The US Dollar Index (DXY) is rising as the market returns from the holiday weekend, breaking a four-day losing streak. The DXY is trading near 104.40 and the 2-year and 10-year US bond yields stand at 4.65% and 4.30%, respectively, at the time of publication.
ANZ expects the Federal Reserve (Fed) to start cutting rates from July 2024. According to CME FedWatch Tool, there is a 53% chance of the US Fed cutting rates by 25 basis points at the June meeting. Recent remarks by Fed officials about the need to cut rates as soon as possible have undermined the U.S. dollar.
The Bank of England (BoE) will keep interest rates at current levels to address persistent consumer prices in the UK. High consumer spending poses additional challenges for Bank of England (BoE) policymakers as they target a technical recession and higher inflation in an environment of higher interest rates.
Trade recommendation: Sell orders trading up to the price level of 1.2520
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