• -GBP/USD retreats towards 1.30
• -JP Morgan a seller on all rallies
• -BoE and Fed remarks in brief

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The exchange rate between the pound and the dollar slipped towards 1.30 in the penultimate session of the week, as the pound underperformed many others, and a trader at JP Morgan said that it would be short in the event of a recovery towards 1.31.

The pound was lower than all G20 currencies except the Chinese renminbi, South African rand and Mexican peso on Thursday ahead of planned remarks by Federal Reserve (Fed) Chairman Jerome Powell and Bank of England (BoE) Governor Andrew Bailey in Washington.

Governor Bailey speaks at the Peterson Institute for International Economics Macro Week 2022 event in Washington on Thursday around 5:30 p.m. London time, and any remarks released would be scrutinized by the market.

“UK Fixed Income [government bond market] continues to suffer and incorporates an aggressive change in tactics from the Old Lady, now rising at every meeting (6) for the remainder of the year,” says Taylor Bloom, a Paris-based forex trader at JP Morgan.

Above: Interbank benchmark rates from Thursday. Source: Netdania Markets. Click on the image for a closer inspection.

“We’re out of cable [selling GBP/USD] here and looking to add vers 1.31. 1.2970/80 must break lower for extension,” JP Morgan’s Bloom said in market commentary sent to institutional and professional clients on Wednesday.

The BoE said in March and Governor Bailey reiterated in April that cost of living pressures could slow the economy later this year and could mean interest rates need not rise in the future. the same extent as the financial markets are currently anticipating.

The exchange rate between the pound and the dollar had slipped near 1.30 ahead of Thursday’s North American open after trading near 1.31 during the European morning, while exchange rates of the US dollar were mixed.

“USD is lower largely due to overall EUR strength. AUD/USD ranges around 0.7440. Bond yields and equities are a bit higher in Europe and the U.S. Crude oil prices have firmed,” says Elias Haddad, senior currency strategist at Commonwealth Bank of Australia.

Shortly after BoE Governor Bailey’s speech, Fed Chairman Powell is expected to take part in the “global economy debate” at the latest meeting of the International Monetary Fund and World Bank Group around 6 p.m.

Above: The exchange rate between the pound and the dollar displayed in hourly intervals alongside the EUR/USD. Click on the image for a closer inspection.

President Powell is likely to draw a lot of attention in light of expectations of an aggressive Fed Funds interest rate hike this year and given recent speculation that US inflationary pressures may be about to hit a low. Mountain peak.

Those expectations were further prompted on Monday this week by Federal Reserve Bank of St. Louis President James Bullard.

He said at a Council on Foreign Relations event that he personally wouldn’t rule out proposing and voting for the Federal Open Market Committee to raise the federal funds rate by 0.50% of an increase of 0. .75% at once at some point as part of the Fed’s effort. to contain inflation.

“GBP/USD obviously also mirrors the broader rise in USD and has tested levels below 1.30. A break could trigger a slide to support in the 1.2775-1.2800 area. needs a close above 1.3150 to reduce such pressure,” says Tim Riddell, London-based macro strategist at Westpac.

“The BoE’s surveys and updated forecasts for MPC on May 5 will be critical in determining the aggressiveness of the cost of living shock and therefore the vulnerability of the pound,” Riddell also said on Thursday.

Above: Exchange rate between the pound and the dollar at daily intervals with Fibonacci retracements of the February decline indicating possible areas of technical resistance. Click on the image for a closer inspection.