GBP/USD Surpasses Key 1.2500 Resistance as US Dollar Index Weakens

The GBP/USD pair has surpassed the critical 1.2500 resistance level during the Asian trading session. The Cable experienced a remarkable upward movement due to the weakening US Dollar Index (DXY). The USD Index reached a new weekly low of 101.20, and further declines are expected as investors predict the Federal Reserve (Fed) will end its quantitative tightening program following a 25 basis point (bp) interest rate hike in May.

S&P500 futures indicate minor losses in the Asian session after a moderately positive Monday, reflecting a decrease in investor risk appetite. The 500-US stock basket is anticipated to experience significant volatility this week as major tech companies report their first-quarter results for CY2023. Meta Platforms, Google, and Microsoft will reveal their quarterly performance and revenue guidance, keeping investors on edge.

The faltering USD Index has also influenced US Treasury yields. The 10-year US Treasury bond yield has dropped to around 3.48%.

The USD Index is expected to remain active this week, as preliminary Gross Domestic Product (GDP) data is slated for release on Thursday. The annualized Q1 GDP is projected to shrink to 2.0% compared to the previous release of 2.6%. A decrease in GDP figures could heighten concerns about a slowdown in the US economy, potentially prompting the Fed to maintain a stable stance on interest rate guidance.

On the UK front, the likelihood of a more aggressive Bank of England (BoE) monetary policy is increasing as the UK grapples with persistent double-digit inflation, labor shortages, and soaring food inflation. UK food inflation has already reached a 45-year high of 19.1% with no signs of easing. BoE Governor Andrew Bailey may consider raising rates by an additional 25 bps to 4.5%.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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