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Apr 25 - 01:55 PM

GBP/USD - COMMENT-Sterling Holds Onto Gains, Focus Shifts To PCE

By Justin Mcqueen  —  Apr 25 - 12:30 PM

GBP/USD has sustained recent advances, despite a slew of hawkish U.S. data releases, and a closing break above resistance at 1.25 would add to topside momentum and see traders pin their sights on the 200-DMA (1.2559).

However, cable bulls with have a difficult path to walk.

Thursday's Q1 core PCE price advance of 3.7% versus 3.4% expected along with below-forecast initial jobless claims were latest in the series of reports weighing on Fed rate-cut bets.

Also, as mentioned previously, short-term risks remain in favour of the dollar while month-end rebalancing flows are touted to be supportive for the U.S. currency given the underperformance in U.S. stocks month-to-date.

Friday is also corporate month-end, which as shown in the chart below, tends to coincide with GBP/USD downside.
Although, this has eased in recent months.

Alongside this, with Treasury yields reaching fresh multi-month highs, the 10-year now at 4.7%, hitting its highest level since November 2023.
This does make it difficult for traders to look away from the dollar.

For now, given the stronger price pressures shown in the Q1 U.S. GDP report, this will naturally heighten the markets sensitivity to Friday’s PCE data – the Fed’s preferred measure of inflation – which on a three- and six-month annualized rate, has risen to 3.5% and 2.9% respectively from sub-2% at the end of last year.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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