GBP/USD trims a part of intraday gains, struggles to find acceptance above 1.1300 mark
- GBP/USD catches fresh bids on Thursday and is supported by a combination of factors.
- The UK PM Liz Truss’ resignation ends the political crisis and boost the British pound.
- Signs of stability in the financial markets weigh on the USD and remain supportive.
- Hawkish Fed expectations act as a tailwind for the USD losses and cap the upside.
The GBP/USD pair gains strong intraday positive traction and rallies over 130 pips from the weekly low touched earlier this Thursday, though struggles to find acceptance above the 1.1300 mark. The pair quickly retreats to the 1.1255-1.1250 region, still up nearly 0.50% for the day.
The British pound strengthens after Liz Truss resigned as Prime Minister of the UK, marking an end of a chaotic chapter that led to the recent chaos in the financial markets. There will be a new leadership contest within a week and Truss will stay as Prime Minister until that is complete. Apart from the UK political developments, a weaker US dollar is seen as another factor offering support to the GBP/USD pair.
Signs of stability in the equity markets fail to assist the safe-haven greenback to capitalize on the previous day's strong move up. The USD bulls remain on the defensive following the disappointing release of the Philly Fed Manufacturing Index, which remains in contraction territory for the second straight month and came in at -8.7 for October. This overshadows an unexpected fall in the US weekly Jobless Claims.
That said, elevated US Treasury bond yields, bolstered by hawkish Fed expectations, act as a tailwind for the greenback. Apart from this, looming recession risks hold back traders from placing aggressive bullish bets around the GBP/USD pair. Nevertheless, spot prices, for now, seem to have snapped a two-day losing streak, though remain below a downward sloping trend-line extending September monthly swing high.
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