GBP/USD has continued its two-week upward trend and hit an intraday high near 1.2250 at the beginning of the week. The rise is attributed to fears of a US recession and positive news from the UK, including hopes for more economic measures to support energy companies from PM Sunak. However, the Cable pair buyers are being tested by cautious sentiment ahead of the key data and events this week.
The Bank of England's (BoE) recent 0.50% rate hike, combined with mostly positive economics and downbeat US Treasury bond yields, have also contributed to the rise in GBP/USD. However, Friday's risk-negative headlines challenged the GBP/USD buyers before the latest surge, which was supported by weekend news.
Over the weekend, Minneapolis Fed President Neel Kashkari expressed concerns about stress in the banking sector and the possibility of a follow-on credit crunch, which he believes could bring the US closer to recession. This news, along with the Financial Times' suggestion of more relief for UK energy companies, has favored GBP/USD prices.
Looking ahead, BoE Governor Bailey's speech may interest intraday traders of the GBP/USD pair. However, the major attention will be given to the Fed's preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index. In the meantime, geopolitical concerns such as Russia's nuclear usage in its war with Ukraine and the ongoing Brexit negotiations continue to influence the GBP/USD bulls.