GBPUSD cheers US Dollar’s pullback, upbeat UK inflation amid sluggish day

Traders remain cautiously optimistic during early Wednesday despite receding hopes of getting a deal on the US debt ceiling extension. The reason could be linked to the optimism of US President Joe Biden and House Speaker Kevin McCarthy that they’ll be able to avoid the default.

With this, mixed US PMIs and a retreat in the Treasury bond yields challenge the US Dollar bulls but fail to impress buyers of Gold and Crude oil. However, the GBPUSD pair benefits from the same, as well as the UK inflation data.

On the other hand, the NZDUSD slumps to most among the G10 currency pair and drowns the AUDUSD pair with it as it fails to surprise markets even with a 0.25% rate increase.

That said, cryptocurrencies remain pressured amid fears of harsh regulations for the ETH and BTC.

Following are the latest moves of the key assets:

• Brent oil eases after refreshing a three-week high, mildly offered near $77.50 at the latest.
• Gold price fades the previous day’s rebound while staying sluggish near $1,975 as we write.
• USD Index prints the first daily loss in three around 103.50 by the press time.
• Wall Street closed with minor losses and so did the Asia-Pacific shares. However, equities in Europe and the UK remain offered during the initial hour.
• BTCUSD and ETHUSD ink minor losses around $26,700 and $1,820 as we write.

Market’s anxiety escalates

Even with the mixed PMIs, the central bankers appear hawkish and hence challenge the market sentiment by suggesting higher rates. On the contrary, fears of US default amplify on reports that the US Treasury secretly asked agencies to delay payment requests.

On a different page, UK inflation came in firmer than market forecasts and justified the previous day’s hawkish comments from BoE officials to underpin GBPUSD run-up.

Alternatively, NZDUSD plummets despite the RBNZ’s 0.25% rate hike as it kept the top-rate forecasts unchanged, signaling nearness to the policy pivot.

It should be noted that the stocks remain dicey and the commodities were unimpressive too as markets await the FOMC Minutes and updates on the US debt limit negotiations.

BTCUSD and ETHUSD, however, fail to cheer the US Dollar’s weakness amid woes of more restrictions on trading, using the once-favored investment assets.

• Strong buy: Gold
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, USDJPY, BTCUSD, AUDUSD

Fed Minutes, US default in focus

Although the markets are jittery, FOMC Minutes and nearness to the US default could offer an active day ahead. Also important are scheduled speeches from leaders of the BoE and ECB, as well as some of the Fed officials. Should the Fed Minutes defend hawkish bias, the US Dollar rebound may take place, provided the US policymakers mark progress on debt limit talks.

May the trading luck be with you!