During the first hours of the European trading session on Wednesday, the GBP/USD currency pair skyrocketed, recapturing the 1.3300 level. This boom happened during a time when the US dollar was unable to thrive. In part, this upward movement primarily reflects the strength of the British pound, supported by a broadly positive market sentiment. Consequently, traders are on the lookout at every move across these currency pairs and asset classes.
The GBP/USD was the only other major being traded better bid, trying to find itself back on firmly established footing above 1.3300. The US dollar was especially weak in this period, which gave the pound the necessary fuel to build upward momentum. Some analysts believe that the dollar’s unsteady fortunes are helping create the perfect storm for the British currency.
At the same time, the EUR/USD pair has continued to tread water in a narrow range below the key 1.1600 level. The euro area economy has proved surprisingly resilient this past summer. This unusual strength has its origin in an EU-US agreement on critical minerals and accelerated expenditure plans in Germany. The EUR/USD is still in a range below 1.1600. Other market actors are on the lookout for further hints regarding the European Central Bank’s (ECB) monetary policy.
On Wednesday the ECB went further, saying it would do no more cuts. This announcement has renewed hopes that the municipality may change course and revisit a more aggressive policy stance later this year or early next year. The balance of risks shifts towards a possible last cut by the ECB should wage measures soften more decisively. This situation could set the stage for an “insurance cut” intended to strengthen overall economic growth.
“Euro area – New ECB call: No further cuts in scope” – FXStreet
As the Asian session progressed on Wednesday, gold prices continued to tumble. They retreated even further from the almost two-week high they hit the day prior. A generally positive risk tone in the market, which has been supportive of assets like stocks, has weighed on gold prices, fueling a retreat from recent gains. This market’s optimism appears to finally be eclipsing gold’s historic role as a safe haven.
At the same time, Bitcoin has struggled as it traded below $61,000 on Wednesday. After running into rejection from critical resistance levels to start the week, things were looking bleak for Bitcoin. The cryptocurrency market came under pressure, with Bitcoin along with Ethereum and Ripple falling due to sustained resistance levels.
“Bitcoin, Ethereum and Ripple slip as resistance levels hold firm” – [“Bitcoin, Ethereum and Ripple slip as resistance levels hold firm” – source]
As to Ripple, it too found it difficult to sustain its upward momentum in the face of broader bear market conditions. As analysts have pointed out, these digital currencies are dealing with significant hurdles. Most importantly, they are having a hard time breaking through their respective resistance levels.