GBP/USD stays defensive around 1.2220-10 as the Cable bears struggle to keep the reins after entering the ring for the first time in four days. Also challenging the quote could be the market’s cautious mood ahead of the key data/events as the Federal Reserve (Fed) decision data begins.
The Cable pair’s latest losses could be linked to the improvement in the market’s sentiment and a rebound in the US Treasury bond yields that allowed the US Dollar to pro recent south-run at the five-week low.
Behind the moves could be the comments from the US policymakers, as well as actions, to tame the fears emanating from the latest banking fallouts.
Among them US Treasury Secretary Janet Yellen’s comments gained major attention as she said, "Treasury, Fed, FDIC actions reduced risk of further bank failures that would have imposed losses on deposit insurance fund." Earlier on Tuesday, Bloomberg shared the news stating that the “US officials are studying ways they might temporarily expand Federal Deposit Insurance Corporation (FDIC) coverage to all deposits, a move sought by a coalition of banks arguing that it’s needed to head off a potential financial crisis.”
Looking ahead, the GBP/USD pair appears more interesting to watch as Brexit voting in the UK’s House of Commons will be crucial amid recent rejections from the European Research Group (ERG) and the Democratic Unionist party (DUP).
Also important will be the UK’s Consumer Price Index (CPI) data for February, expected 9.8% YoY versus 10.1% prior, as the same could hint the Bank of England’s (BoE) action on the “Super Thursday”.
Above all, the Federal Reserve’s (Fed) reaction to the banking crisis will be crucial to watch for clear directions as the 0.25% rate hike is already priced in.
Also read: Federal Reserve Preview: Powell to persevere and raise rates, US Dollar set to (temporarily) rise
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