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Denis Sergienko • 2022-12-12

GBP/USD struggles despite upbeat UK data as US Dollar begins crucial week on firmer footing

GBP/USD struggles despite upbeat UK data as US Dollar begins crucial week on firmer footing

Global traders turn cautious as the key central banks are up for conveying their monetary policy decisions this week. The market’s anxiety joins recession woes and the Sino-American tussles to help the US Dollar in extending Friday’s gains.

The same weighs on the GBPUSD even as the monthly data dump from Britain came in firmer. It should be noted that the NZDUSD dropped the most among the major G10 currency pairs whereas USDCAD occupies the other hand as crude oil prices recover from the yearly low.

Alternatively, gold prints the first daily loss in four while other metals and commodities print mild losses for the day. That said, the US stock future traced Wall Street’s downbeat performance while the equities in the UK and Europe begin the day with mild losses.

Moving on, BTCUSD drops for the fourth consecutive day while ETHUSD also prints a two-day downtrend as fears surrounding Binance and FTX poke crypto buyers before the all-important trading week gains momentum.

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Following are the latest moves of the key assets:

  • Brent oil struggles to defend buyers while staying pressured around yearly low.
  • Gold drops for the first time in four days, down 0.25% intraday near $1,790 at the latest.
  • USD Index stays mildly bid for the second consecutive day.
  • Wall Street closed negative and so stocks in Europe and the UK begin the day on the negative side.
  • BTCUSD prints four-day downtrend near $16,900 whereas ETHUSD stays defensive near $1,250.

Cautious mood underpins US Dollar

Friday’s early signals for the US inflation renewed the market’s interest in the US Dollar and bolstered the hawkish bets on the Fed. The same joined fears of economic slowdown elsewhere, as well as US Treasury Secretary Janet Yellen’s upbeat comments, to keep the greenback firmer amid a sluggish Monday. Adding strength to the USD could be the latest communication from China that unveils the dragon nation’s dislike for the US sanctions on its diplomats due to human rights violations.

Elsewhere, NZDUSD registered notable losses as NZIER economic updates tame the hawkish hopes from the RBNZ. On the same line, fears surrounding the RBA’s next move and the broad risk aversion, despite being mild, weigh on the risk barometer AUDUSD.

GBPUSD couldn’t ignore the recession woes surrounding the UK economy despite witnessing firmer monthly data. However, the Cable bears appear to run out of steam as dovish bets on the BOE recede.

Crude oil rebounds on the supply woes as Russia rejects the oil price cap while gold price fails to defend the previous daily advances amid broad-based US Dollar recovery.

Cryptocurrencies continue to become the victims of regulation fears and the latest bankruptcies while equities in the West remain sluggish.

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

A day of relief before the busy week

Having witnessed a sluggish start to the key week, global markets may witness inactive performances amid a light calendar. Also likely to restrict the trading momentum could be the mixed concerns surrounding the Fed, ECB and the BOE’s next moves as the recent data favor policy hawks but the economic slowdown fears escalate, which in turn challenge further rate hikes.

May the trading luck be with you!