Bears Await More Weakness
The pair of the GBP and USD continued in their depressed state all through the early parts of the European session while bearish traders were still waiting for prolonged weakness in the pair under the psychological benchmarks of 1.3000.
After the price movement that lacked any form of direction which occurred the previous day, the leading GBP/USD currency pair was able to garner new rounds of supply on Tuesday and it finally stepped back some paces closer to the year-to-date low point it reached just in the past week. The market mood communicated that traders were not impressed by the largely upbeat unemployment report from the United Kingdom. They rather took a cue from the stable US dollar purchasing interest.
GBP/USD price chart. Source TradingView
The United Kingdom Office for National Statistics said that the International Labor Organization unemployment report fell unexpectedly down to 3.8% within the space of three months that ended in February against 3.9% where it was previously. In addition, more information showed that average earnings, as well as bonuses, increased by 5.4%, and the statistical figure of those who claimed unemployment benefits still dropped by a significant 49,000 in the month of February.
The Feds Direct the Market
The examined report, nevertheless, did not in any way give impetus to the pound sterling and it was basically just overshadowed by bullish sentiments around the US dollar that were underlining it in the first place.
The possibility that the US Federal Reserve is going to implement a tighter monetary policy, as well as fears of inflation, boosted the US bonds yield to new heights not seen in many years and it underpinned the pair.
The US Federal Reserve is set to implement a 50 basis point interest rate increase during its next monetary policy meeting which is scheduled for May. The market has fully priced this in and more evidence to reaffirm it was given in the Federal Open Market Committee meeting minute that was published last week. Aside from that, the market still speculates the Federal Reserve will yet increase the interest rates by another 50 basis points in the next meeting after May. It will then make 100 basis points in a short period.
For now, all attention is given to the US consumer price index report to be published during the North American session. The war in Ukraine also keeps giving its own concerns as it underpins the US dollar as a safe-haven asset.