GBPUSD hits a new daily bottom and targets mid-1.1400s as the USD increases somewhat.

VOT Research Report

Analytics and Recommendations

On Wednesday, the GBPUSD experiences some panic selling and ends a three-day gaining trend.

A milder risk tone and higher US bond yields reinvigorate the demand for the USD and put downward pressure on it.

The BoE’s dismal assessment of the UK economy drags on the Sterling and accelerates the decline.

On Wednesday, the GBPUSD pair drifts downward and pulls further away from its recent high of almost a week, which was at the round number of 1.1600. In the opening hour of the European day, the selling tendency intensifies, pushing spot prices to a new daily low in the 1.1470-1.1465 range.

The US Dollar is being helped by a number of reasons to halt its current decline to its lowest level since September 20, which is regarded as serving as a headwind for the GBPUSD pair. The markets are still pricing in at least a 50 basis point rate hike in December lead to termination bets for a more forceful tightening of policy by the Fed. This continues to maintain the high US Treasury bond yields, which aids in supporting the safe-haven greenback along with the general market apprehension.

On the other hand, the Bank of England’s pessimistic assessment of the UK economy continues to damage the British Pound. In fact, according to the UK central bank, a recession will linger through the entire year 2023 and the first half of 2024. Additionally, the BoE last week suggested a lower terminal high than what the markets had anticipated. In addition, the Sterling is affected by some cross-driven weakness brought on by an intraday increase in the EURGBP pair, which adds to the GBPUSD pair’s moderately tendered tenor.

The most recent downward movement during the past hour or two, however, can be linked to some technical selling below the psychological level of 1.1500. The GBPUSD pair is currently at the mercy of the USD price dynamics after recently rising from levels close below the mid-1.1100s. Trading on Wednesday will be guided by remarks made by Richmond Fed President Thomas Barkin and New York Fed President John Williams in the absence of any pertinent economic data from of the US or the UK.

In addition, the demand for the USD will be driven by the US bond yields and a general increase in risk investor sentiment, which will support the GBPUSD pair. Prior to the release of the UK’s provisional Q3 GDP report on Friday, attention will still be on the most recent consumer inflation data from the US on Thursday. The significant macro releases will have an impact on which direction the major will move in the following leg.

Key technical standards to observe