Market news
23.05.2022, 03:36

GBP/USD marches past 1.2500 to renew 12-day high ahead of BOE’s Bailey

  • GBP/USD takes the bids to refresh 12-day high amid risk-on mood.
  • UK PM Johnson, BOE’s Pill hints at fiscal, monetary tools to calm down bears.
  • US warns the UK about no transatlantic deal if it scraps NIP.
  • Upbeat sentiment underpins recovery moves but comments from BOE’s Bailey, Brexit news will be crucial for fresh impulse.

GBP/USD remains firmer around a fortnight's high, extending the previous week’s rebound, as British policymakers sound hopeful of overcoming the Brexit and inflation-led economic hardships. Also keeping the cable buyers hopeful is the broad US dollar weakness amid a lackluster start of the week. That said, the quote takes the bids to 1.2545 during the mid-Asian session on Monday.

Be it UK PM Boris Johnson or Bank of England (BOE) Chief Economist Huw Pill, both of them tried to appease GBP/USD buyers by shrugging off fears that the policymakers are running out of resources to battle the fears emanating from Brexit and the Russia-Ukraine crisis.

That said, UK PM Johnson said on Friday, “in the months ahead we are going to have to do what we did before, we're going to use our fiscal firepower that we built up, that we have, to help," per Reuters. On the other hand, BOE’s Pill mentioned Friday that they still have some way to go in policy tightening, as reported by Reuters.

Elsewhere, mixed concerns over China’s covid conditions and repeated Fedspeak, backing the 50 bps rate hike, seem to allow the global markets to consolidate recent losses. The same weigh on the US Dollar’s safe-haven demand and drowns the US Dollar Index (DXY) to 102.70, down 0.31% intraday at the latest.

Alternatively, the European Union’s (EU) agitation towards the UK’s readiness to alter the Northern Ireland Protocol (NIP) spreads as US House Speaker Nancy Pelosi recently warned Britain of having no transatlantic trade deal with the UK if it repeals NIP. “She warned of no Transatlantic trade deal if the UK risks Good Friday Agreement,” said the UK Daily Mail.

Amid these plays, the US 10-year Treasury yields rise by around 2.5 points (bps) to 2.81% whereas the S&P 500 Futures add near 1.0% gains, to 3,940 at the latest, by extending recovery from the one-year low marked during the last week.

Looking forward, Bank of England (BOE) Governor Andrew Bailey is up for a speech at the Oesterreichische National Bank Annual Economic Conference, in Vienna. The BOE Boss will speak on an interesting subject titled, "Monetary policy, policy interaction and inflation in a post-pandemic world with severe geopolitical tensions."  Hence, the odds are brighter that Bailey traces the recent clues from Johnson and Pill to keep the GBP/USD firmer.

Additionally, headlines concerning Brexit, inflation and Russia will also be crucial for the near-term GBP/USD directions.

Technical analysis

A clear upside break of the 21-DMA, around 1.2440 by the press time, directs GBP/USD towards the monthly high surrounding 1.2640.

 

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