The GBP/USD exploded to the upside to reach a fresh multi-year high above the 1.3600 psychological level. This currency cross held onto the day’s amazing gains. This increase is pumping up GBP/USD to its highest point since February 22. It is mainly driven by broad-based selling pressure on the US Dollar (USD). The recent release of equally weak Jobless Claims data has only added to this selling pressure, making for a perfect storm for a dollar decline.
The GBP/USD rally mirrors the trend across the board as market participants respond to the declining USD. Market observers think that the balance of market forces is still in favor of the British Pound today. They cite persistent recession fears and soft labor market as main drivers. As a result, GBP/USD has been able to rally, demonstrating strength in the face of significant global economic headwinds.
Therefore, the USD is getting punched not just by GBP, but from other angles as well – including the Japanese Yen. The Yen finds itself unable to catch a bid. Rising expectations of interest rate increases by the Bank of Japan (BoJ) are capping its upside potential. This bearish development has allowed the USD/JPY pair to maintain its gains above the 143.00 psychologically important level. Its strength is holding up, even with the recent rise in the US Dollar.
Unlike the positive trends in currency pairs markets, gold prices have succumbed to a notable drop after hitting multi-week peaks on Friday. Earlier in the day, gold crossed above $3,400 per ounce, hitting an all-time high. Speculations began as soon as reports leaked of a phone call between US President Trump and Chinese President Xi. Consequently, it was difficult for XAU/USD to hold onto its rallying streak. This global political conversation has upended the gold market. As profitability has been eroded by this overproduction, prices have plummeted, leaving the future in doubt for the investors.
By the end of the day, gold had dipped under $3,400 mark, representing a wave of nervousness from investors in choppy market conditions. Since then, analysts have been looking closely at every move made between the US and China. These geopolitical factors are all driving market sentiment and positive commodity pricing.