The GBP/USD has seen some fluctuations in recent days due to a combination of factors. Federal Reserve Chairman Jerome Powell’s two-day appearance at the US Congress had a hawkish tone, which initially dampened market sentiment. However, rising unemployment claims in the US helped improve market sentiment and pushed the GBP/USD higher. In this article, we will delve into the impact of these factors on the GBP/USD and explore upcoming events that may impact its movement.
Powell’s Hawkish Stance and Market Sentiment
Powell’s hawkish stance at the US Congress initially led to a decline in the GBP/USD. However, as the market digested his comments, it began to recover. The US Dollar Index (DXY) also edged down by 0.40%, which acted as a tailwind for the GBP. US Treasury bond yields also eased ahead of an essential jobs report and next Tuesday’s inflation data, which may further impact the GBP/USD movement.
Rising Unemployment Claims and Market Sentiment
Despite a strong ADP report and more job openings than anticipated, rising unemployment claims in the US may ease the tightness of the labor market. A downbeat US Nonfarm Payrolls report, coupled with high unemployment claims, could reduce the Federal Reserve’s need to tighten conditions at a faster pace. This news improved market sentiment, which also impacted the GBP/USD movement.
On the UK front, an employment report will be released on March 14. The Chancellor of the Exchequer, Jeremy Hunt, will also announce the spring budget. These events may impact the GBP/USD movement, as investors will be keeping a close eye on any announcements regarding economic policies or job data.
Additionally, money market futures are pricing in a 91% chance that the Bank of England (BoE) will increase rates by 25 bps on the BoE’s next meeting on March 23. This news may already be priced into the market, but any surprises may impact the GBP/USD movement.
The GBP/USD has seen some ups and downs in recent days, but the impact of Powell’s hawkish stance and rising unemployment claims have had a positive impact on the Pound’s movement. With upcoming events such as the employment report, the spring budget announcement, and the BoE meeting, investors will be closely watching the GBP/USD for any movements or surprises. It is important to keep an eye on these events and the impact they may have on the GBP/USD in the short term.