Trepidation weighed on the currency pair GBP/USD so that it dipped under pressure trading close to the 1.3350 handle in early European markets. This pullback marks a minor disappointment as the duo first starts to fritter away some of its week-to-date advances. These latest GBP/USD fluctuations are the result of an increasing demand for US Dollars. This increase is particularly propelled by the anticipation of policy statements in the near future from the US Federal Reserve.
According to market analysts, GBP/USD is still under pressure, but major reasons are behind its awful performance. “GBP/USD stays pressured near 1.3350 amid US Dollar demand ahead of Fed,” noted FXStreet. Speculation and speculative trading activity around the Federal Reserve’s next moves have heated up. This has resulted in a surprising broad-based appreciation of currency valuations.
Meanwhile, gold prices faced heavy selling pressure in early Wednesday action after hitting two-week highs of $3,435. This correction marks a strong retreat as market participants unwind their bets before a series of potential gamechanging economic events. There is renewed optimism going into the next round of US-China trade talks. Market participants are sorting through the possible long-term effects on global trade and economic stability, and it’s having an immediate effect on gold prices.
Profit-taking behaviors among investors further impacted gold’s trajectory, as many sought to capitalize on recent gains prior to the Federal Reserve’s policy announcements. “Gold corrects from two-week highs, Fed decision eyed,” highlighted FXStreet, underscoring the cautious sentiment prevailing among traders in the precious metals market.
Investors are anxious to see what the Federal Reserve will do. At the same time, demand for the US Dollar has skyrocketed, further weighing on GBP/USD prices and gold in particular. Together, those two factors mark a significant inflection point in the market, as geopolitical developments and the Federal Reserve’s monetary policy leanings collide.