In early Wednesday trade in Europe, GBP/USD was under heavy pressure, trading around the 1.3350 level. The currency pair is enjoying modest losses, which have washed away some of its weekly gains. Traders are liquidating their positions as they see the need for a stronger US Dollar rising. This movement comes just ahead of the widely expected announcements by the US Federal Reserve.
The US Dollar’s strength is largely attributed to the market’s cautious optimism regarding upcoming economic events, particularly the Federal Reserve’s policy announcements. With the Fed’s decision on interest rates looming, market participants are closely monitoring any shifts in sentiment that could affect currency valuations.
“GBP/USD stays pressured near 1.3350 amid US Dollar demand ahead of Fed” – www.fxstreet.com
At the same time, gold prices have been hit by heavy and relentless selling pressure as they undergo a sharp correction from recent record highs. Gold had hit two-week highs of $3,435 earlier this week but have pulled back on profit-taking. The renewed optimism surrounding upcoming trade talks between the United States and China has contributed to this volatility in the gold market.
The combination of these two developments has led to wildly swinging prices. Traders are calculating the impacts from the Fed’s actions as well as the anticipated results from US-China talks. These factors are not only what drives gold prices up but they echo throughout the currency markets, specifically impacting GBP/USD.
“Gold corrects from two-week highs, Fed decision eyed” – www.fxstreet.com
The market is still absorbing these unprecedented and unfortunate events. Analysts are already betting that GBP/USD and gold will respond dramatically to any announcements made by the Federal Reserve as well as any news from U.S./China trade talks. Such economic indicators further emphasize just how globalized our markets are. While this is a good start, real-time, or at least more timely, information would be essential to informing investor decisions.