- GBP/USD prints losses of 0.46%, on risk-off, after last week’s BoE’s decision.
- The Federal Reserve’s “higher-for-longer” mantra continues to underpin the Greenback, with several Fed speakers emphasizing the need for another rate hike and sustained high rates.
- The last Bank of England’s decision weighs on the Pound Sterling, set to continue to weaken.
The British Pound (GBP) still trades on the back foot against the US Dollar (USD) slumps below the 1.2200 psychological level, with sellers setting their sights on the 1.2000 figure. The GBP/USD is trading at 1.2159 after hitting a daily high of 1.2215.
British Pound trades on a weaker note against the US Dollar, with sellers eyeing the 1.2000 mark as risk aversion dominates the market
Wall Street finished the session with losses as risk aversion continues to dominate the financial markets narrative. Traders bracing for the “higher-for-longer” Federal Reserve’s mantra has kept the Greenback rallying due to high US bond yields.
On Tuesday, Minnesota Fed President Neil Kashkari said that another rate hike is needed, and then it would be necessary to hold rates at that level while adding that a soft landing is possible.
Recently, other Fed speakers commented that the US central bank needs patience, while others like Fed Governor Bowman stressed that another interest rate hike is needed. Hence, based on the latest “dot plots” reported in September’s Summary of Economic Projections (SEP), the Fed would hike 25 bps toward the end of the year and would keep rates above the 5% threshold through all the next year.
On the UK front, the lack of data leaves traders leaning on the latest Bank of England’s (BoE) decision, perceived as a dovish one, following an inflation report showing that inflation is cooling down. Nevertheless, the latest UK economic data, particularly softer retail sales, PMIs, and GDP clinging to positive territory, has reignited recessionary fears.
GBP/USD Price Analysis: Technical outlook
The GBP/USD is downward biased, and after dropping below the May 25 low of 1.2308 – also the last cycle low, it opened the door for further losses. Before cracking that level, the pair showed signs of selling strength once it broke below the 200-day moving average (DMA) at 1.2432. As of writing, the major hovers in the mid 1.2100/1.2200 figure, though a breach below 1.2100 could open the door to test the March 15 daily low of 1.2010. before testing the 1.2000 figure.