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Jun 07 - 11:55 AM

GBP/USD - COMMENT-Sterling Needs More Than Johnson's Survival To Thrive

By Paul Spirgel  —  Jun 07 - 09:55 AM

GBP/USD will probably continue to struggle after Prime Minister Boris Johnson survived an unexpectedly large rebellion within his party nS8N2X206N while upcoming BoE and Fed meetings highlight dollar-positive policy divergence.

Cable pulled off overnight lows of lows by 1.2433 has rallied to NorAm session highs by 1.2540 up 0.12%, though 10-day moving average resistance by 1.2565 could present a formidable barrier for bulls to overcome.

Reduced rate expectations weigh heavily on GBP/USD as the BoE seeks to address the low-growth affects of rising inflation -- currently at 40-year highs of 9% -- rather than attacking price growth full on.

If the Fed maintains its aggressive inflation-fighting stance at next week's meeting, sterling may be pushed down to test support by 1.2411, the 50% Fib of 1.2156-1.2667.
A close below 1.2411 would open the way for tests of mid-May support by 1.2321 and 2022 lows by 1.2156.

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Source:
Refinitiv IFR Research/Market Commentary

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