The GBP/USD is trading lower at 1.1800 in early Wednesday morning in Europe, following an unsuccessful attempt to rebound from the previous day’s annual low. In doing so, the cable pair tracks the broad strength of the US dollar while paying little attention to hawkish market bets on the Bank of England’s (BOE) next move.

According to The UK Times, “the money markets are pricing in the possibility that the base rate, which is presently at 1.75 percent, will have reached about 4 percent by March.” According to the report, the money market bets represent a dramatic realignment of the market’s rate expectations as inflation continues to rise.

It should be mentioned that early August PMI readings in the UK showed mixed results, with the Manufacturing measure falling to 46.00 compared to 51.1 projections and 52.1 before, while the Services PMI climbed to 52.5 versus 52.0 projected and 52.6 in July.

GBP/USD

In addition, the latest Confederation of British Industry (CBI) survey data on developments in British manufacturing revealed that the Manufacturing Order Book Balance fell to -7 in August, the first negative reading since April 2021, from +8 in July and +3 of market estimates.

Elsewhere, ex-Chancellor Rishi Sunak suggesting less impetus for the Bank of England (BOE) appeared to have relieved pressure on the GBP/USD and benefited from selling recently. According to The Guardian, “Rishi Sunak has claimed that Liz Truss would “scare” overseas investors if she endangered the independence of the Bank of England.”

Fed funds futures traders, on the other hand, are pricing in a 52.5% likelihood of a 75 basis-point (bps) rate rise at the Fed meeting next month. According to Reuters, the probability of a 50 basis point rise in September was slightly better than even Monday.

According to Reuters, Minneapolis Fed President Neel Kashkari recently stated that the main concern is that we misunderstand underlying inflation trends. The policymaker also stated that the Fed could ease up on rate rises if sufficient evidence of CPI headed toward 2%. While addressing the Jackson Hole Symposium on Friday, Fed’s Kashkari allayed fears that Fed Chair Powell might halt rate rises, as predicted by Goldman Sachs.

GBP/USD Technical Outlook

The GBPUSD pair continued its negative trade to hit 1.1740, strengthening forecasts of the bearish trend continuing next time, with our next target set around 1.1650.

The EMA50’s negative pressure supports the recommended decrease, with a break of 1.1835 ending the present negative pressure and pushing the market into a transitory positive corrective with the first target of 1.1970.

Today’s trading range is predicted to be between 1.1680 support and 1.1835 resistance.

Today’s projected trend is bearish.