GBP/USD was a notch stronger at the start of the new week, but still remained in the area not far from last week’s over 11-month low of 1.3194, as market players were expecting a statement on monetary policy and economic growth from Bank of England Deputy Governor Ben Broadbent who is to speak at Leeds University at 11:30 GMT.
“Should he validate the case for a hike, Omicron risks notwithstanding, we would regard there to be scope for a modest GBP bounce,” Jeremy Stretch, head of G10 FX strategy at CIBC, was quoted as saying by Reuters.
Markets are now largely expecting borrowing costs to be left without change at the central bank’s policy meeting on December 16th due to the spread of the Omicron variant globally.
“Clearly, Omicron-related uncertainty risk is compromising the prospect of a December move,” Stretch said.
BoE policymaker Michael Saunders, who voted in favor of a rate hike in November, said on Friday that further information regarding Omicron’s impact was needed before deciding how to vote at the upcoming policy meeting.
“At present, given the new Omicron COVID variant has only been detected quite recently, there could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy,” BoE’s Saunders said.
As of 10:56 GMT on Monday GBP/USD was edging up 0.19% to trade at 1.3256, while moving within a daily range of 1.3210-1.3267. Last week the major Forex pair slipped as low as 1.3194, which has been its weakest level since December 21st 2020 (1.3188). The currency pair has retreated 0.26% so far in December, following another 2.82% loss in November.
Bond Yield Spread
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, equaled 14.27 basis points (0.1427%) as of 9:15 GMT on Monday, up from 14.2 basis points on December 3rd.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 1.3250
R1 – 1.3292
R2 – 1.3352
R3 – 1.3393
R4 – 1.3434
S1 – 1.3190
S2 – 1.3149
S3 – 1.3089
S4 – 1.3029
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