Introduction:
The GBP/USD pair has been making gains over the past few days, albeit with a lack of follow-through. The currency pair has been pushed higher due to bets for less aggressive Fed rate hikes, which continue to weigh on the USD. However, concerns over the banking crisis and expectations of a rate hike pause by the BoE are capping gains.
Bets for Less Aggressive Fed Rate Hikes:
The USD has been under pressure due to expectations of less aggressive rate hikes by the Fed. This has been driven by a recent string of weaker-than-expected economic data, which has raised concerns over the strength of the US economy. As a result, investors are now pricing in a slower pace of rate hikes by the Fed, which is weighing on the USD and supporting the GBP.
Banking Crisis Woes:
Another factor that is capping gains for the GBP/USD pair is concerns over the banking crisis. The recent collapse of the Turkish lira has led to concerns over the exposure of European banks to Turkey’s economy. This has raised concerns over the stability of the banking sector, which is weighing on the GBP.
Expectations of a BoE Rate Hike Pause:
Finally, expectations of a rate hike pause by the Bank of England (BoE) are also capping gains for the GBP/USD pair. The BoE has been gradually raising interest rates in recent months, but concerns over the impact of Brexit on the UK economy are now causing investors to question the pace of future rate hikes. This has led to expectations that the BoE may pause its rate-hiking cycle, which is limiting gains for the GBP.
Conclusion:
In conclusion, the GBP/USD pair has been making gains over the past few days, thanks to bets for less aggressive Fed rate hikes. However, concerns over the banking crisis and expectations of a rate hike pause by the BoE are capping gains. As a result, it remains to be seen whether the currency pair will continue to rise or if it will be held back by these factors in the coming weeks.
