GBPUSD SIGNAL 05-12-2022 : GBPUSD shifts its business above 1.2300 as market mood soars, US ISM Services PMI eyed.

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GBPUSD SIGNAL

GBPUSD SIGNAL 05-12-2022 : GBPUSD shifts its business above 1.2300 as market mood soars, US ISM Services PMI eyed.

  • GBP/USD has refreshed its five-month high above 1.2340 and is expected to extend its rally amid a risk-on profile.
  • After upbeat US NFP data, a better-than-projected US ISM Services PMI release may trigger a negative market impulse.
  • Accelerated UK food inflation is impacting sentiment of households ahead of Christmas season.

The GBPUSD pair has shifted its auction profile above the critical hurdle of 1.2300 in the Asian session. The Cable has witnessed significant buying interest from the market participants as the risk-on profile has strengthened further. The major has refreshed its five-month high above 1.2340 and is expected to extend its rally amid significant interest in risk-perceived assets.

GBPUSD SIGNAL : The US Dollar Index (DXY) has refreshed its five-month low at 104.14 amid rising odds of a slowdown in the current interest rate hike pace by the Federal Reserve (Fed). To reduce financial risks and to observe the outcome of efforts made yet to bring price stability, the Fed will decelerate its rate expansion pace.

S&P500 futures display a subdued performance as investors have turned precautionary ahead of US ISM Services PMI data. Meanwhile, the 10-year US Treasury yields have jumped to near 3.53%.

The upbeat US Nonfarm Payrolls (NFP) data reported on Friday failed to propel the US Dollar, however, a better-than-projected US ISM Services PMI release could fetch a firmer cushion for the same. Per the consensus, the economic data is seen at 55.6 vs. the prior release of 54.4. Apart from that, the catalyst which will impact Cable is the ISM Services New Orders Index data, which is seen higher at 58.5 against the former release of 56.5.

GBPUSD SIGNAL : After displaying decent demand for labor by the United States economy, firmer forward demand for services would trigger a risk-off mood. Robust demand in the US economy would indicate higher expectations for short-term inflation, which could compel the Fed to continue the current rate hike pace.

On the United Kingdom front, food inflation  surged to a 45-year high at 12.4% in November, higher than the prior release of 11.6% in October. A fresh impulsive move in the food category has weakened projections for the Christmas season ahead. Higher food prices are expected to leave households with lower earnings for disposable, which could hit their Christmas purchases.

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