GBP/USD drops below 1.20 again
Well, that didn’t last very long, did it?
The GBP/USD has fallen back below 1.20 handle yet again. The Northern Ireland deal optimism has faded rather quickly, while the US dollar has found love following a weaker start to the new month, as Fed's Kashkari weighed in on hawkish rhetoric.
The earlier selling of the dollar as a result of the risk rally was bought at the start of US session. This was partly in response to the Minneapolis Federal Reserve President Neel Kashkari adding to the recent hawkish rhetoric. Kashkari said he is leaning to continue to push up his policy path versus December, although hasn’t decided whether he will advocate for a 25-basis point or 50-basis point move at the central bank’s next FOMC meeting later this month. He added that the most important signal will be the FOMC’s latest projection to be published at the conclusion of the March 22 meeting, about how high interest rates will need to go to bring down inflation.
We also had some mixed-US data as ISM PMI was weaker on the headline, but its prices index jumped nearly 7 points to above expansion level of 50.0, at 51.3 from 44.5 last. This is providing more reason for the Fed to be cautious than declare victory on its fight against inflation.
Given the GBP/USD's refusal to stay above 1.20, the path of least resistance remains to the downside and, as such, a drop below recent lows around 1.1915 cannot be ruled out now.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
The GBP/USD has fallen back below 1.20 handle yet again. The Northern Ireland deal optimism has faded rather quickly, while the US dollar has found love following a weaker start to the new month, as Fed's Kashkari weighed in on hawkish rhetoric.
The earlier selling of the dollar as a result of the risk rally was bought at the start of US session. This was partly in response to the Minneapolis Federal Reserve President Neel Kashkari adding to the recent hawkish rhetoric. Kashkari said he is leaning to continue to push up his policy path versus December, although hasn’t decided whether he will advocate for a 25-basis point or 50-basis point move at the central bank’s next FOMC meeting later this month. He added that the most important signal will be the FOMC’s latest projection to be published at the conclusion of the March 22 meeting, about how high interest rates will need to go to bring down inflation.
We also had some mixed-US data as ISM PMI was weaker on the headline, but its prices index jumped nearly 7 points to above expansion level of 50.0, at 51.3 from 44.5 last. This is providing more reason for the Fed to be cautious than declare victory on its fight against inflation.
Given the GBP/USD's refusal to stay above 1.20, the path of least resistance remains to the downside and, as such, a drop below recent lows around 1.1915 cannot be ruled out now.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
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