The US Dollar Index has surged to a one-month high as central banks around the world, including the Federal Reserve and the European Central Bank, are expected to lower borrowing costs in June. The Bank of England is also likely to join this trend after a dovish meeting, with the Swiss National Bank already cutting its borrowing rate unexpectedly. This global rate-cutting cycle has boosted the US dollar index, while major G7 currencies have weakened.
In response to the shifting central bank policies, short-dated US Treasury yields have remained stable despite the dollar’s rally. Conversely, Euro and UK 2-year bond yields have continued to decline as markets reassess recent central bank developments. The GBP/USD pair, now trading at a one-month low, faces further losses with potential support levels at 1.2547, 1.2471, and 1.2381, while resistance may be encountered at 1.2628 and 1.2667.
Retail trader data shows a majority of traders are net-long on GBP/USD, suggesting a potential continued downward trend in prices. If you have any insights or opinions on the US Dollar and the British Pound, whether bullish or bearish, you can share them at the end of the article or contact the author on Twitter. Stay updated on forex news and technical analysis with DailyFX to understand the dynamics influencing global currency markets.
