GBP/USD Rallies To Fresh Highs

On Wednesday, the British pound surges by 0.31%. Thin liquidity conditions, and the lack of economic data, currently exacerbate volatility in the last days of the year.

The British pound rallies trading the New York session, trading at 1.3452 at press time. Investors’ mood is mixed, as depicted by European stock indices fluctuating between gainers and losers, while US equity futures point towards higher open.

Factors including assessments of the Omicron variant and month, quarter, and year-end flow cause market participants to book profits as 2022 looms.

In the US money markets, the US 10-year benchmark note advances four basis points, punches through the 1.50% threshold, sits at 1.522%, while the US 2-year Treasury yield stays flat. In the meantime, the US Dollar Index, which tracks the US dollar value against a basket of six rivals, slides some 0.09% down to 96.11, weighing on the buck vs. the risk-sensitive GBP.

With 2022 around the corner, investors are preparing towards a year of higher inflation, central bank tightening, led by the Federal Reserve, the coronavirus pandemic, and China’s economic outlook.

As the easy money cycle approaches the end, at least for now, US Treasury yields began to reflect the US central bank hawkish shift, as US 10s, the 20s, and 30s, surged.

The absence of significant UK economic data left the GBP/USD traders leaning towards the remainder of the minimal economic data from the US.

The Trade Balance posted a deficit of 97.78B, more than the 89.00B contraction expected for November, while in some 30 minutes, Pending Home Sales for November are expected to rise up to 0.5%.