GBPUSD fades recovery around mid-1.2600s, focus on BoE’s Bailey

Market players extend the previous day’s sluggish momentum amid a light calendar and mixed geopolitical headlines. In doing so, the traders ignore hawkish signals from the US to keep the US Dollar pressured while helping prices of Gold and commodities.

That said, the Greenback’s weakness also fails to trace the upbeat US Treasury bond yields as traders seem to prepare for this week’s key US inflation data, namely the Consumer Price Index (CPI) for March scheduled for release on Wednesday.

While the US Dollar holds lower grounds, recently licking its wounds, the EURUSD buyers take a breather while fearing a dovish halt from the European Central Bank (ECB) during Thursday’s monetary policy announcements. That said, GBPUSD also struggles to extend the week-start run-up as traders appear cautious before today’s speech from Bank of England (BoE) Governor Andrew Bailey, especially after mixed UK Retail Sales signals.

Further, USDJPY prints a three-day winning streak while tracing firmer yields amid the Japanese policymakers’ hesitance to suggest further rate hikes from the Bank of Japan (BoJ).

On a different page, AUDUSD and NZDUSD both remain on the front foot while justifying the market’s cautious optimism and capitalizing on the hopes of witnessing more stimulus from China.

Gold price renews the record high near $2,355 while crude oil also extends the previous day’s recovery amid supply crunch fears.

Talking about crypto, BTCUSD and ETHUSD both snap a three-day winning streak as traders prepare for the Bitcoin halving while ignoring optimism emanating from Ethereum ETF approvals and the upbeat performance of Runes.

Following are the latest moves of the key assets:

• Brent oil edges higher past $91.00 as it prints mild gains at the latest.
• Gold price reached an all-time high near $2,360 by the press time.
• The USD Index struggles for clear directions near 104.00 after a downbeat start to the week.
• Wall Street closed mixed and so did the Asia-Pacific stocks. Further, shares in Europe and the UK also lack clear directions during the initial trading hour.
• BTCUSD and ETHUSD both fall nearly 1.5% intraday to around $70,600 and $3,630 at the latest.

US Dollar struggles amid mixed clues, sluggish market…

Although there were no major data/events scheduled for publishing on Monday, a slew of Fed officials entertained the traders, even if they failed to defend the US Dollar’s recovery. That said, Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee mentioned that the Fed has to determine how long to be restrictive on monetary policy. On the contrary, Minneapolis Fed President Neel Kashkari said, “The bank cannot 'stop short' on the inflation fight.”

It should be noted that the April survey of consumers from the New York (NY) Fed highlighted the current inflation woes in the US and put a floor under the US Dollar. As per the latest reports, the one-year inflation expectations remained unchanged at 3.0% but the three-year counterpart rose to 2.9% from 2.7% whereas the five-year mark eased to 2.6% from 2.9%. On Monday, the International Monetary Fund (IMF) cited the risks emanating from the private credit market but refrained from flashing any major alarms.

Geopolitical news has been testing the risk takers and putting a floor under the US Dollar, which in turn caps the prices of Gold at an all-time high, as well as allowing the crude buyers to keep the reins amid the supply crunch woes. That said, Israeli Prime Minister Netanyahu mentioned that a date has been set for an invasion of Rafah in Gaza. Netanyahu’s statement was in contrast to the US updates that suggested no major invasion of Rafah. On the same line, Hamas has rejected Israel's most recent cease-fire proposal and bolstered the market woes.

Also, updates from US Treasury Secretary Janet Yellen’s China visit offered grim headlines as Yellen said on returning that China must halt subsidies in industries like autos and green energy. Previously, Chinese Premier Xi Jinping criticized the US-Taiwan ties and cited the issue as the cornerstone of having positive ties with Washington.

Against this backdrop, the US Dollar Index (DXY) licks its wounds near 104.10, after a negative start of the week, whereas the EURUSD and GBPUSD edge higher, despite lacking upside momentum of late.

As per the latest ECB Bank Lending Survey, the credit conditions in the bloc aren’t promising, which in turn could help the policymakers to advocate early rate cuts.

The UK’s retail sales spending, per the British Retail Consortium (BRC), jumped the most in eight months as the headline Retail Sales grew 3.5% YoY in March versus 1.1% prior whereas the Like-for-like sales rose 3.2% yearly compared to February’s 1.0% growth. It should be noted, however, that the Barclays Consumer Spending data marked the smallest increase since September 2022, by reprinting the 1.9% YoY growth, in March.

Australia’s Westpac Consumer Confidence for April dropped to the lowest level in five months, to -2.4% versus -1.8% prior, whereas the weekly prints of the ANZ-Roy Morgan Australian Consumer Confidence index followed suit with an 81.9 figure compared to 82.8 prior. That said, the National Australia Bank’s (NAB) Business Conditions and Business Confidence printed mixed outcomes for March. Even so, the market’s cautious optimism joins the broad US Dollar weakness to underpin the AUDUSD pair’s strength of late.

On the same line, NZDUSD also grinds higher as bulls poke the 0.6050 level despite a collapse in New Zealand’s Quarterly Survey of Business Opinion (QSBO) from the New Zealand Institute of Economic Research (NZIER). That said, the NZIER QSBO showed that the Business confidence dropped to -25% from -2% prior whereas the Capacity utilization also eased to 90.2% versus 91.4% prior.

It should be noted that the USDJPY remains on the front foot despite the US Dollar’s weakness, especially amid the market’s expectations of a delay in the Fed’s rate cut and the BoJ’s preference for easy rates.

Above all, prices of Gold and crude oil gain major attention as both of them remain on the front foot at multi-day tops amid geopolitical woes and hopes of lower rates shortly. In doing so, the commodities ignore hawkish Fed concerns.

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

Nothing major ahead…

Looking forward, a few third-tier US data and the weekly oil inventories from the private survey will join the central bankers’ comments to entertain the market players. Among them, a speech from BoE Governor Bailey will gain major attention as the GBPUSD pair has been firmer in the last two consecutive weeks despite the mixed economic updates from Britain. Above all, Wednesday’s monetary policy meetings of the Reserve Bank of New Zealand (RBNZ) and the Bank of Canada, as well as the US CPI and the FOMC Minutes, will be crucial to watch for clear directions and hence traders may witness a lack of momentum on Tuesday.

May the trading luck be with you!