Hangs near 1.3700 amid strengthening US dollar, BOE rate surprise

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  • GBP / USD consolidates gains on Tuesday at the start of European trading time.
  • The US dollar index remains strong near 93.50 ahead of Powell’s testimony.
  • Mixed clues amid BOE rate hike signal, Brexit concerns, rising gas prices are keeping sterling gains in check.

GBP / USD posted slight gains on Tuesday morning after testing 1.3728 high during the overnight session. The pair fell to 1.3700 following comments from policymakers at the UK and US central banks. At the time of writing, GBP / USD is trading at 1.3707, up 0.07% on the day.

The US Dollar Index (DXY), which tracks the performance of the greenback against its six major rivals, remains supported above 92.40 as investors digested the hawkish Fed as concerns over the recovery China’s economy persist. On top of that, US durable goods orders jumped 1.8% in August, well above the market consensus of a 0.7% increase.

Benchmark 10-year US Treasury yields hit 1.50%, the highest since June 26, with hopes the Fed would start tightening monetary policy soon, despite slower growth and higher inflation planned for the year. In addition, Fed Chairman Jerome Powell and U.S. Treasury Secretary Jenet Yellen are reportedly appearing before the U.S. Senate Banking Committee to discuss oversight of the Cares Act (Coronavirus Aid, Relief, and Economy Security). Powell said in his remarks that prices were higher, the hiring problems could last longer than expected, but saw them as transitory.

On the other hand, the British pound gained following a speech by the Governor of the Bank of England (BOE) Andrew Bailey to the Society of Professional Economists, he warned that the interest rate hike could come sooner than expected. despite the existing quantitative easing. Nonetheless, all the gains have evaporated on lingering Brexit concerns. In the latest developments, French European Affairs Minister Clément Beaune said the current energy crisis in Britain reflects the ‘intellectual fraud’ that is Brexit.

For now, traders remain focused on releasing US Merchandise Trade Balance, S & P / Case-Shiller Domestic Price and CB Consumer Confidence data to get further trading momentum.

Additional GBP / USD Levels


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