GBP/USD eyes a break below 1.1350 as odds for widening Fed-BOE policy divergence soar

GBP/USD is likely to display a vertical downside move after surrendering the critical support of 1.1360.
Fed’s full percent rate hike will widen the Fed-BOJ policy divergence.
UK’s labor market and growth projections do not support further policy tightening.

Sagar Dua FXStreet

The GBP/USD pair is hovering around the critical support of 1.1360 in the Asian session. The asset is expected to witness a sheer downside after dropping below the support mentioned above on expectations of widening Federal Reserve (Fed)-Bank of England (BOE) policy divergence.

The scheduled monetary policy meeting of the Fed on Wednesday is expected to conclude with a third consecutive 75 basis points (bps) rate hike or to a greater extent, with hawkish guidance and a bleak growth outlook. Price pressures have failed to display meaningful exhaustion signals led by higher-than-expected August inflation print readings for both headline Consumer Price Index (CPI) and core CPI. Therefore, the Fed has no option but to paddle up the pace of hiking interest rates.

Well, there is no denying the fact that the BOE will also hike its interest rates in its monetary policy meeting scheduled on Thursday. The UK households are also facing the headwinds of forced inflated payouts. Growth prospects and labor market conditions are not lucrative for tightening the policy. Despite that BOE Governor Andrew Bailey will swallow the bitter gulp and is expected to announce a rate hike by 50 bps. The expectations of a higher rate hike extent by the Fed are supporting the greenback bulls.

This week, the UK economy will also report the S&P Global PMI. The Manufacturing and Services PMI are seen at 47.5 and 50 respectively. A mixed performance is expected by the UK economy on the PMI front.

GBP/USD

Overview
Today last price	1.1374
Today Daily Change	-0.0007
Today Daily Change %	-0.06
Today daily open	1.1381

Trends
Daily SMA20	1.1574
Daily SMA50	1.1852
Daily SMA100	1.2085
Daily SMA200	1.2686

Levels
Previous Daily High	1.1461
Previous Daily Low	1.1357
Previous Weekly High	1.1738
Previous Weekly Low	1.1351
Previous Monthly High	1.2294
Previous Monthly Low	1.1599
Daily Fibonacci 38.2%	1.1397
Daily Fibonacci 61.8%	1.1421
Daily Pivot Point S1	1.1338
Daily Pivot Point S2	1.1296
Daily Pivot Point S3	1.1234
Daily Pivot Point R1	1.1442
Daily Pivot Point R2	1.1504
Daily Pivot Point R3	1.1546

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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