GBP/USD Dips as US Dollar Index Recovers and Market Awaits Tech Giant Earnings

The GBP/USD pair has slipped below 1.2440 during the Asian session due to exhaustion. The Cable has experienced selling pressure as the US Dollar Index (DXY) demonstrates a rebound after defending the crucial support level of 101.63.

In the Asian session, S&P500 futures have extended losses as market participants grow anxious ahead of quarterly results from tech giants. Amazon, Facebook, and Google will announce their quarterly earnings this week. Investors are concerned about the effects of reduced demand caused by higher interest rates from the Federal Reserve (Fed) on their results.

In contrast to the USD Index’s recovery, US yields have declined. The 10-year US Treasury yields have fallen to around 3.56%. The USD Index’s recovery has risen to nearly 101.80.

Moving forward, the USD Index is anticipated to experience significant activity due to the release of United States Durable Goods Orders data. An increase in Durable Goods demand will reinforce core consumer inflation expectations and support the Fed’s decision for a consecutive 25 basis points (bps) rate hike.

On the Pound Sterling side, further contraction in the United Kingdom Retail Sales data has not affected the likelihood of another rate hike from the Bank of England (BoE). UK inflation remains persistently high, which may prevent the BoE from pausing its policy-tightening efforts.