GBP/USD bears approach 1.0600 in search of fresh record low, UK’s fiscal plans, Fed’s Powell eyed
|- GBP/USD takes offers to refresh intraday low, reverses the previous day’s corrective bounce.
- Downbeat comments surrounding UK’s economic plans from WH Adviser Deese, IMF weigh on prices.
- Strong yields propel US dollar amid hawkish Fedspeak, firmer data.
- Statements from Fed, BOE policymakers could offer additional guidance, further downside expected.
GBP/USD remains on the back foot while reversing the previous day’s corrective bounce, taking offers near 1.0630 during early Wednesday morning in Europe. In doing so, the Cable pair respects the US dollar’s latest run-up amid the rush for risk safety, as well as downbeat economic prospects for the UK.
Recently, White House economic adviser Brian Deese said, per Reuters, that he was not surprised by the negative reaction of financial markets to Britain's fiscal plans and tax cuts, underscoring the need to maintain "fiscal prudence, fiscal discipline." Earlier in the day, International Monetary Fund (IMF) openly criticized Britain's new economic strategy on Tuesday, following another slide in bond markets that forced the Bank of England (BOE) to promise a "significant" response to stabilize the economy, reported Reuters.
It should be noted that the fears emanating from the Eurozone’s energy crisis and China’s dismal efforts to defend the yuan seemed to have recently propelled the US Treasury yields and the US dollar. That said, the US Dollar Index (DXY) renews the 20-year high near 114.70 while the US 10-year Treasury yields jump to 4.0% for the first time since 2010.
The quote managed to rebound the previous day as British Finance Minister Kwasi Kwarteng mentioned that they will have a credible plan to reduce debt-to-GDP. On the same line could be the mixed Fedspeak and increasing odds of the Bank of England’s (BOE) heavy rate hike.
Looking forward, Deputy Governor for Financial Stability of the Bank of England, Sir Jon Cunliffe, is up for a speech and will be watched closely for clues about the BOE’s next move, amid chatters over a 1.0% rate hike. Further, Fed Chairman Jerome Powell will also speak and can entertain the GBP/USD traders.
Technical analysis
A sustained downtrend below the 5.5-year-old support line, now resistance around 1.0970, keeps the GBP/USD pair hopeful of a fresh all-time low, currently around 1.0340.
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