GBPUSD bulls struggle to keep reins ahead of BoE

The full markets’ return fails to inspire momentum traders early Thursday amid a cautious mood ahead of the top-tier central bank events and the US data. The US Dollar, however, pauses a three-day losing streak but lacks a warm welcome from other major currencies and commodities.

EURUSD lacks upside momentum after rising in the last three consecutive days while GBPUSD portrays the Cable buyer’s anxiety ahead of the Bank of England (BoE) monetary policy decision, especially after the mixed UK inflation data. Further, USDJPY prints a six-day winning streak as traders brace for the Bank of Japan’s (BoJ) much-debated July rate hike.

AUDUSD and NZDUSD hold lower grounds amid China concerns while USDCAD recovers from a one-week low to pause a four-day losing streak as Bank of Canada (BoC) Minutes sounds dovish and Crude Oil stays defensive after reversing from a seven-week high the previous day. Further, the USDCHF remains depressed at the lowest level in three months, down for the third consecutive day, ahead of the Swiss National Bank (SNB) monetary policy announcements.

Gold price rises to a two-week high while breaking the short-term trading range upwards as traders rush to the risk safety.

BTCUSD pauses the three-day losing streak while ETHUSD extends the previous day’s rebound. That said, the latest optimism among the crypto traders lacks acceptance amid a slump in Bitcoin volume of transactions and exposure among the hedge funds. However, Ethereum’s successful passage of the SEC scrutiny put a floor under the ETH.

Following are the latest moves of the key assets:

• WTI Crude oil remains mildly offered around $80.50 after reversing from a seven-week high the previous day.
• Gold rises to a two-week high as bulls attack $2,345, up 0.70% intraday at the latest.
• The USD Index pauses the three-day losing streak despite lacking upside momentum near 105.30 at the latest.
• Asia-Pacific shares edged lower but British and European equities remained slightly positive during the initial trading hour.
• BTCUSD and ETHUSD both pare weekly losses around $65,500 and $3,580 respectively as we write.

US Dollar recovers as full markets return…

The US Dollar regained upside momentum after declining in the last three consecutive days as traders prefer the Greenback amid hawkish Fed bias, especially due to the cautious mood ahead of the second-tier US data. It’s worth noting, however, that “Froth forecasts” compiled by State Street Associates (based on research by Harvard University professor Robin Greenwood) signal increasing optimism among the US equity traders and challenge the risk-on mood. Additionally helping the US Dollar could be China’s efforts to tame currency strength via monetary policy actions.

The US Dollar’s strength joins dovish comments from European Central Bank (ECB) Governing Council member Mario Centeno to also weigh on the EURUSD prices. That said, ECB’s Centeno said that the ECB will cut if the disinflation process continues.

On the other hand, mixed prints of the UK inflation clues and the market’s lack of conviction on the BoE’s hawkish bias exert downside pressure on the GBPUSD pair even as the British central bank is expected to keep the current monetary policy unchanged during today’s announcements.

USDJPY fails to justify the optimism among Japanese business houses and the BoJ’s readiness to lift the rates again in July. That said, the Yen pair’s latest run-up could be linked to a recovery in the Treasury bond yields, the market’s cautious optimism, and the rising concerns about the Fed’s fewer rate cuts in 2024.

New Zealand (NZ) ducked recession woes by posting a 0.2% GDP growth for Q1 2024 after marking two consecutive contractions. However, the NZDUSD fails to justify the upbeat growth data as the NZ Westpac Consumer Survey gauge for Q2 2024 eased to a three-quarter low. Further, AUDUSD lacks upside momentum despite the slightly upbeat mood and hawkish bias of the Reserve Bank of Australia (RBA). Moving on, USDCAD recovers from a one-week low while snapping a four-day losing streak amid a pullback in the prices of Canada’s key export item, namely crude oil, as well as due to the BoC Minutes suggesting rate cuts in July.

Apart from the individual catalysts, the People’s Bank of China’s (PBoC) no rate change and multi-month low of the USDCNY fix also exert downside pressure on the Antipodeans like the Dollars of Australia, New Zealand, and Canada.

Elsewhere, Crude Oil bears the burden of an inventory build and a lack of news suggesting a supply crunch whereas Gold benefits from the mixed mood and the US Dollar’s struggle to convince buyers so far during the week.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

Central bankers, mid-tier US data in the spotlight…

Looking ahead, monetary policy announcements from the BoE and SNB will be the key even as both the central banks will likely keep the currency practices and rates unchanged. That said, growing chatters about the SNB’s rate cut, however, could propel the USDCHF in case of a surprise. Meanwhile, the BoE’s hawkish tone might not entertain the GBPUSD buyers unless they rule out rate cuts in 2024, which is less likely.

Apart from the central bank decisions, the Eurozone Consumer Confidence and Philadelphia Fed Manufacturing Survey for June, US housing data for May, and weekly jobless claims will also entertain the intraday traders. While most of the statistics from the bloc have been downbeat and favor the ECB’s rate cut, strong US data will be needed to drown the EURUSD prices. It should be noted that a slew of policymakers from the ECB and the Fed are also up for speaking and can offer momentum in the Euro pair.

May the trading luck be with you!