The GBP/USD has been on a wild ride this week, with market sentiment and the dollar dominating its movements. It’s been a tough week for the pound, with a lack of concrete data on the economic docket to give it any real direction. Instead, it has had to rely on overall market sentiment to guide it through the stormy seas of forex trading.
Despite the challenging conditions, the pound has managed to hold its own and has even recovered most of its losses from Tuesday’s sell-off. This morning, it rallied higher, almost erasing all of Tuesday’s losses. This was due to an improvement in overall sentiment, as markets appeared satisfied that the news out of First Republic Bank in the United States would have no lasting impact on sentiment or trigger a fresh selloff in bank stocks.
Tech Giants Provide a Boost for GBP/USD
The boost in sentiment was further bolstered by upbeat Q1 earnings from US tech giants Microsoft and Alphabet (Google). This led to renewed selling of the US dollar as investors flocked to these tech darlings in search of higher returns.
Looking ahead, it seems that overall market sentiment and the dollar will continue to dominate GBP/USD movements. While it was a light day on the economic docket, with US durable goods data the only notable release, there is still plenty of potential for volatility in the coming days.
If market sentiment remains positive for the rest of the week, we could see a retest of the recent highs for the GBP/USD. This could be coupled with a hawkish narrative surrounding the Bank of England (BoE) in light of last week’s UK inflation data, which should keep GBP supported ahead of the FOMC meeting next week.
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