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MTrading Team • 2022-10-19

GBPUSD ignores strong UK inflation amid jittery markets

GBPUSD ignores strong UK inflation amid jittery markets

Wednesday appears to be a turnaround day for the markets as previous optimism fades. The cautious mood underpins the Treasury yields and recalls the US dollar buyers, which in turn triggered the much-awaited pullback of other currencies that were rising without major positives.

With this, the GBPUSD pair fails to cheer strong UK CPI and reverses from an important resistance whereas EURUSD tracks the downside moves amid broad USD buying.

Gold drops to the three-week low while crude oil prints a four-day downtrend amid a fresh risk-off mood.

Equities in the Asia-Pacific region were positive but seem to lose bullish potential as European traders begin the day’s work.

ETHUSD and BTCUSD both extend the previous day’s losses amid fears of more regulatory fears for Bitcoin.

Following are the latest moves of the key assets:

  • Brent oil remains pressured near the fortnight low as sellers attack $90.00.
  • Gold prints mild losses around $1,645 while snapping two-day uptrend.
  • USD Index recovers from a two-week low to 112.30, up 0.25% intraday at the latest.
  • FTSE, Eurostoxx and DAX are all printing mild losses after a positive start to the day’s trading.
  • Wall Street rose for the second consecutive day with Dow Jones leading the bulls.
  • BTCUSD and ETHUSD are both down for the second consecutive day as sellers poke $19,200 and $1,300 levels respectively.
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Back to normal!

Having witnessed a less-convincing optimism, traders are back to where they’re most suited, i.e. in the bear’s territory. While firmer US Treasury yields are the motor for the latest USD run-up, hawkish Fed comments and upbeat inflation data from the UK and Eurozone also add to the market’s fears via the risk of more rate hikes amid recession woes. China’s four-month high coronavirus numbers and Russia’s intense fight in Ukraine are additional catalysts that recalled the greenback buyers.

On the other hand, Japanese policymakers keep speaking of their ability to defend the yen without doing much. However, verbal meddling seems to help USDJPY is limiting the upside momentum of late.

The UK’s CPI refreshed a multi-year high and pushes the BOE to announce heavier rate hikes, in addition to the Quantitative Tightening (QT). Though, a political crisis in the nation weighs on the cable.

Furthermore, the Biden administration’s readiness to release more oil from the strategic reserves weighs on the oil prices, in addition to the firmer US dollar.

Elsewhere, a report that Bitcoin energy jumped more than 40% highlights fears of more regulations for the leading cryptocurrency and weighs on the BTCUSD, as well as the ETHUSD.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Yields are important

Moving on, the Canadian inflation data and updates surrounding British PM Liz Truss’ future as the national leader could entertain the traders. However, major attention will be given to the yields as they’re back to the multi-year high marked earlier in the week. Should the bond coupons refresh the tops, the US dollar may extend the latest rebound and can weigh on prices of currencies, as well as commodities and Antipodeans.

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