GBP/USD was trading just under the 1.3450 level during European trading on Friday, marking a modest rebound from the recent lows of the pair. Market participants were understandably wary about the currency pair. Their journey required the political acumen to cross a booming exchange rate, driven by a strong US Dollar. At the same time, EUR/USD remained near the bottom of its losses around 1.1650, making little headway despite a more widespread USD correction lower.
Traders maintained an overall bearish view on the GBP/USD pair’s movement. As the weekend drew near, they were running out of time to consider their options. FXStreet reported, “GBP/USD treads water around 1.3450 on US Dollar rebound.” The pound has since recovered some of those losses. It is still very sensitive to changes in the value of the dollar.
Simultaneously, the EUR/USD currency pair found it difficult to break out. It persisted in the red, even flirting with the 1.1650 level as the dollar regained its mojo. Speculators closed out USD profit taking before facing the weekend. This policy step deepened the euro’s downward trajectory and increased overall unrest in a foreign exchange market that had been quite volatile since the onset of the pandemic.
Gold prices turned sharply around on Friday as well, as they made a new effort to develop momentum above the $3,400 challenge. It failed to find acceptance above this threshold, dropping back down below a two-week high through early European hours. “Gold price makes a fresh attempt to build on momentum beyond $3,400 mark,” stated FXStreet, emphasizing the ongoing battle for upward momentum.
Gold traders on edge
Traders in the gold market continue to operate with an abundance of caution, as they weigh up profit taking opportunities. The failure to hold above $3,400 illustrates just how nervous the financial markets are right now. Traders are closely considering their positions as we head into the weekend.
The economic context underlying these protests warranting underfunding is further widened by new measures by the Bank of England to counteract inflation. In recent days the bank has lowered interest rates by another 25 basis points to 4%. This latest move echoes the Fed’s cautious and data-dependent approach to monetary policy. Officials are increasingly concerned about inflation blistering along at uncomfortably high levels. This is the first signal that the current easing cycle is starting to come to an end.