GBPUSD eases from multi-month high amid pre-BoE positioning

US Dollar reverses post-inflation losses during early Thursday as traders reassess dovish bias on softer CPI. The risk appetite, however, appears slightly positive amid hopes that the US policymakers will be able to avoid the looming government default. The cautious optimism allows US stock futures to print mild gains but the Treasury bond yields remain pressured.

Elsewhere, downbeat prints of China inflation versus upbeat Australian consumer inflation expectations failed to provide any buying opportunity to the AUDUSD, making it the weakest G10 currency pair. Further, GBPUSD also remains pressured as traders have hawkish hopes from the BoE.

That said, EURUSD, Gold and Crude Oil stay pressured while USDJPY struggles to justify the US Dollar’s strength amid downbeat yields and dovish statements from the Bank of Japan’s (BoJ) summary of monetary policy meeting.

On a different page, leading cryptocurrencies drop for the sixth consecutive day while fading the bounce of a 1.5-month low marked the previous day.

Following are the latest moves of the key assets:

• Brent oil struggles to counter the previous day’s pullback from one-week high of around $77.00.
• Gold price extends Wednesday’s losses to $2,025, down 0.20% intraday at the latest.
• USD Index reverses US inflation-led losses near 101.80.
• Wall Street closed mixed and so did the Asia-Pacific shares. However, equities in Europe and the UK trade mixed during the initial hour of trading.
• BTCUSD and ETHUSD drop for the sixth consecutive day to $27,500 and $1,830 as we write.

Dicey markets favor US Dollar despite softer US CPI

Global markets turned dicey after initially cheering the softer inflation data from the US and China. While the hopes of avoiding debt-ceiling expiry and no fresh banking rout allow traders to remain optimistic, fears of higher for longer rates and recession woes tame the risk-on mood. Additionally, the cautious mood ahead of today’s Bank of England (BoE) monetary policy meeting also negatively affects the risk profile.

That said, CPI from the US and China dropped in April to a two-year low but Australia’s Consumer Inflation Expectations improve for May. Further, Bank of Japan (BoJ) officials defend ultra-easy monetary policy amid hopes of easing inflation pressure.

With this, the US Dollar and bonds gain the market’s favor while Gold, Crude Oil and AUDUSD pare the weekly gains. That said, GBPUSD rose to the highest levels since April the previous day before printing mild losses by the press time.

Additionally, fears of more US SEC hurdles for the cryptocurrency players and recession woes exert downside pressure on the BTCUSD and ETHUSD prices.

• Strong buy: Gold
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, USDJPY, BTCUSD, AUDUSD

BoE is the key

BoE braces for a 0.25% rate hike and can weigh on the GBPUSD prices in case the policymakers stick to the plan and avoid any hawkish comments. Apart from the main interest rate decision, the quarterly economic forecasts and BoE Governor Andrew Bailey’s speech should also be watched carefully as the Cable pair remains near the multi-month high.

May the trading luck be with you!