GBP/USD On a Downtrend – UK’s Economic Struggle Weighs - Forex News by FX Leaders
GBP/USD On a Downtrend - UK’s Economic Struggle Weighs

GBP/USD On a Downtrend – UK’s Economic Struggle Weighs

Posted Wednesday, September 28, 2022 by
Skerdian Meta • 2 min read

The cable bears praise the UK’s economic struggles, and the bullish triggers for the US dollar as GBP/USD resumes its downtrend after a brief break on flashing the record low. Nonetheless, the GBP/USD retreated to an intraday low of 1.0686 during Wednesday’s Asian session. Following another drop in bond markets that prompted the Bank of England (BOE) to promise a “strong” response to stabilize the economy, the International Monetary Fund (IMF) openly attacked Britain’s new economic plan on Tuesday, according to Reuters.

Alternatively, “normalizing monetary policy is not a competition between countries, and markets are sometimes uncomfortable with that,” said Huw Pill, Chief Economist at the Bank of England (BOE), on Tuesday. Similarly, British Finance Minister Kwasi Kwarteng attempted to appease GBP/USD bears by stating that the government will have a credible plan to cut debt-to-GDP.

In other news, leaks in Russia’s gas pipeline in the Baltic Sea increase concerns that the Eurozone’s energy supply issues will be permanent. The same factors exacerbate fears of a recession within the EU, particularly in the absence of spectacular data and inflation fears.

GBP/USD

The US Dollar Index (DXY) remained moderately bought near a two-decade high as US Durable Goods Orders fell 0.2% in August, falling short of market expectations of -0.4% and a revised down the prior reading of -0.1%. Furthermore, US CB Consumer Confidence increased for the second consecutive month in September, rising to 108.00 from 104.5 anticipated and 103.20 previously.

Despite the positive news, Chicago Fed President Charles Evans stated, “At some point, it will be necessary to reduce the pace of rate increases and hold rates for a while to assess the impact on the economy.” According to Reuters, markets were more concerned with St. Louis Federal Reserve Bank President James Bullard, who stated that the United States had a major inflation problem. “There will be more rate hikes in future meetings.”

Following that, the Bank of England’s Deputy Governor for Financial Stability, Sir Jon Cunliffe, will deliver a speech that will be widely monitored for clues about the BOE’s next step amid talk of a 1.0% rate hike. Furthermore, Fed Chairman Jerome Powell will talk, which may interest GBP/USD traders.

GBP/USD Technical Outlook

The GBP/USD pair is still caught between the important levels indicated by 1.0635 support and 1.0845 resistance, therefore we remain neutral for the time being, waiting for one of these levels to be breached in order to identify the next targets clearly.

We remind you that breaking the resistance will propel the market to another bullish corrective with a target of 1.1015 while breaking the support marks the key to resuming the main bearish wave with 1.0500 and 1.0295 as the next important stations.

Today’s trading range is predicted to be between 1.0670 support and 1.0870 resistance.

Today’s predicted trend: Bearish

 

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