GBP/USD came under pressure Wednesday morning, operating around the 1.3350 level, where it was posting small Wednesday losses. The currency pair, which recently found itself on the back of some notable bullish momentum, is at the same time giving back much of its weekly mark-up. Market participants have great interest in the evolving financial picture. They, along with everyone else, are waiting with bated breath for big announcements from the US Federal Reserve.
GBP/USD traded just above 1.3350 in early trading, a sign that the market remains wary. The currency pair has failed to maintain its recent burst of strength. This trend is an ominous harbinger of volatility as we enter a pivotal few weeks of important economic indicators. Market analysts say that the pair’s movement could be guided in large part by general market conditions, including changes in demand for the US dollar.
At the same time, the gold market experienced heavy downside selling pressure on Wednesday. After touching two-week highs of $3,435, gold prices vigorously corrected with profit accidentally taking control of the market. The drop in the value of gold reflects complicated market machinations. More specifically, it depends on what’s being priced in – namely, expectations regarding US Federal Reserve policy announcements.
Another factor that has kept markets volatile and affected investor sentiment is renewed optimism over the upcoming US-China trade talks, which has caused a dramatic effect on gold prices. Traders are watching intently as news leaks out from these highly sensitive negotiations. In response, countless others are shifting their investments away and taking a much more bearish stance on gold. Process-wise, the Fed’s decisions produce a major amount of expectation in the market. As these announcements get closer, the tendency is for increased demand for the US dollar.
Market analysts are stressing the significance of the Federal Reserve’s policy for what comes next. Their decisions could have major ramifications on how GBP/USD and gold prices develop. The announcement as it approaches has market participants in a fever scope and anticipating huge volatility. They are well aware that central bank decisions have a profound effect both on realized economic performance and inflation expectations.