GBP/USD struggles for firm near-term direction
GBP/USD struggles for firm near-term direction, remains confined in a range around 1.2900
The GBP/USD pair kicks off the new week on a softer note, albeit it lacks follow-through selling and remains confined in a range around the 1.2900 mark amid mixed fundamental cues.
The US Dollar (USD) holds steady below a four-month high touched last week amid expectations that US President-elect Donald Trump's policies would spur inflation and restrict the Federal Reserve's (Fed) ability to ease policy aggressively. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair, though the Bank of England's hawkish stance helps limit the downside.
In fact, the BoE warned that the expansive Autumn Budget introduced by Chancellor Rachel Reeves is expected to fuel inflation, suggesting that it adopt a cautious stance toward rate cuts in 2025. Furthermore, the risk-on mood contributes to capping gains for the safe-haven Greenback and offers some support to the GBP/USD pair, warranting some caution before placing aggressive bearish bets.
Investors also seem reluctant and might prefer to move to the sidelines ahead of important macro releases from the UK and the US. This week's economic docket features the UK jobs data on Tuesday, the US consumer inflation figures and the Producer Price Index (PPI) on Wednesday and Thursday, respectively, followed by the Prelim Q3 UK GDP and the US Retail Sales on Friday.
Apart from this, investors will take cues from Fed Chair Jerome Powell and BoE Governor Andrew Bailey's speech on Friday. This, in turn, will determine the next leg of a directional move for the GBP/USD pair. In the meantime, the underlying strong bullish tone surrounding the USD might continue to cap spot prices, suggesting that any attempted move-up could be seen as a selling opportunity.(Cay)
Source: Fxstreet
