By Orbex

GBPUSD tumbles amid fears of recession

The pound plunges as fears of an economic slowdown in Britain take hold amid a cost of living crisis.

The Bank of England has adopted a softer tone recently by acknowledging that its policy is walking a tight line between inflation and recession. The central bank may proceed with another 0.25% hike this week. Nonetheless, markets have scaled back bets on the magnitude of upcoming rate hikes.

As the sterling reaches a 21-month low against the greenback, a dovish repricing in interest rate expectations may continue to weigh on the currency. 1.2270 would be the next stop and 1.2800 an intermediate resistance.

AUDUSD consolidates as RBA meets

The Australian dollar steadies ahead of the RBA meeting. Australia’s consumer prices accelerated in the first quarter to a 20-year high, fueling speculation that the RBA may start policy normalization soon.

Wage growth is gaining momentum amid a tight labor market. It not only compounds the impacts of global supply disruptions but also suggests that inflation is here to stay. Markets are pricing in a cash rate target of 0.5% in June at the latest.

However, one may not exclude the possibility of a surprise rate hike this week. In this case, the Aussie could bounce back above 0.7300. A dip below 0.7100 would send the pair to 0.6970.

XAUUSD weakens as dollar surges

Gold fell to a two-month low as the US dollar rallies across the board. The latter’s upward trajectory has been a main headwind for the precious metal.

Expectations of aggressive policy tightening by the Fed have made the dollar a formidable safe-haven alternative to gold during these times of uncertainty. In contrast to economic risks in Europe and Asia, sounder US fundamentals may allow the Fed to go full throttle without a hitch.

A combination of rising US yields and weakness in other major currencies further boosts demand for the buck at the expense of bullion. The price may slip towards 1840. And 1930 has turned into a resistance.

SPX 500 struggles over mixed corporate guidance

The S&P 500 softens as weaker consumer confidence drags corporate outlook. A mixed bag of quarterly earnings acts as a confirmation that supply chain disruptions and surging labor costs have taken a toll on profit margins.

Downbeat revenue forecasts point to a slowdown in corporate and household spending. further weighing on investor sentiment. The US economy contracted for the first time since the start of the pandemic.

In turn, this fuelled concerns that abrupt monetary tightening could wreck the recovery. The index is struggling to hold onto this year’s lows near 4150. 4500 is a major resistance ahead.

Test your strategy on how the USD will fare with Orbex – Open Your Account Now.

Article by Orbex

Orbex is a fully licensed broker that was established in 2011. Founded with a mission to serve its traders responsibly and provides traders with access to the world’s largest and most liquid financial markets. www.orbex.com

---

Latest Financial Markets News:

• China launches a plan to boost domestic consumption. Global trade tensions remain. Mar 17, 2025
• Escalating trade tensions triggered a risk reduction among investors Mar 14, 2025
• Gold poised for record highs strong demand and stable outlook Mar 14, 2025
• The Bank of Canada cut the interest rate as expected. The EU and Canada imposed retaliatory tariffs on the US. Mar 13, 2025
• EUR/USD holds onto hopes of further growth as investors assess the risks Mar 13, 2025
• The uncertainty of the new US administration’s tariff policy negatively affects investor sentiment Mar 12, 2025
• Japanese yen declines: temporary pause amid strong long-term outlook Mar 12, 2025
• Hedge funds have significantly reduced their holdings in equities. Oil fell to $66 per barrel Mar 11, 2025
• Gold remains in consolidation amid ongoing market uncertainty Mar 11, 2025
• China’s consumer prices fell the most in 13 months. Canada has chosen a new prime minister Mar 10, 2025