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May 16 - 11:55 AM

GBP/USD - CORRECTED-BUZZ-COMMENT-Sterling Steadies Above 2022 Low, Bracing For Key UK, US Reports Tues

By Paul Spirgel  —  May 16 - 11:00 AM

Corrects to "fall" in paragraph 3

GBP/USD held on Monday slightly above the previous session's 2-year low of 1.2156 with traders cautious ahead of upcoming UK and U.S. data that may add details to the global growth picture and possibly diminish downward pressure on sterling.

Tuesday's UK employment data and U.S. retail sales and manufacturing data that may provide important economic updates as markets grow increasingly concerned about the potential for U.S. stagflation and even recession.

GBP/USD's 9.4% fall year-to-date leaves it vulnerable to unwinding of sterling shorts 1096742NNET if markets begin to expect the Fed to address signs of U.S. economic weakness since the dollar's 2022 strength has been predicated mostly on widening policy-driven yield.

GBP/USD bulls have suffered in Q2 2022 from diminished BoE rate-hike expectations as the banks seeks to combine a growth focus with inflation fighting.

The BoE's rate temperance, though deleterious to the pound, may have been prescient.
Should the Fed dial back its rate path to support growth, GBP/USD is likely to rise away from 2022 lows targeting the 10-DMA at 1.2342 and May 9-11 highs by 1.24.


GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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