GBP/USD ignores UK PM Truss’ push for prosperity below 1.1400, focus on central banks, politics


  • GBP/USD remains pressured around multi-year low as traders brace for FOMC.
  • UK PM Truss unveiled policies to achieve higher growth, stamp duty cut gains a major attention.
  • US-UK talks appear ‘uninteresting’ amid no trade deal prospects, Brexit talks appear lucrative.
  • Fed’s 0.75% rate hike, fresh economic projections and Chairman Powell’s speech will be crucial.

GBP/USD holds lower ground near the 37-year bottom, close to 1.1375, as market braces for the US Federal Reserve’s (Fed) monetary policy announcement during early Wednesday in Asia. In doing so, the Cable pair ignores recently positive updates from the UK’s political frontier, as well as Brexit, amid fears that the divergence between the Fed and the Bank of England (BOE) is likely to remain wider.

UK PM Lizz Truss unveiled a slew of policy measures, including a cut in the stamp duty as she pushes for ‘prosperity’, per The Times. UK PM Truss says, per The Guardian, “Chancellor will explain how tax cuts will be paid for on Friday.”

It should be noted that UK PM Truss also rejected the chatters that her policies would encourage the Bank of England to raise interest rates, reported The Guardian. This is something which might have exerted more downside pressure on the GBP/USD prices ahead of the BOE meeting, up for publishing on Thursday.

Elsewhere, UK PM Truss and US President Joe Biden will have a bilateral meeting on Wednesday but the former has already turned down any scope for a trade deal with the US, which in turn pours cold water on the face of the GBP/USD optimists.

Alternatively, expectations that the UK and Northern Ireland (NI) will fasten Brexit process, even at the cost of more aggressive measures, seemed to be a positive catalyst for the Cable pair. On the same line are the hawkish hopes from the “Old Lady”, as the BOE is popularly known.

The chatters that the US Federal Reserve (Fed) may surprise markets by a 1.0% rate hike, per the latest talks from global economist Nouriel Roubini, also weighed on the risk-off mood and the GBP/USD prices.

It should be noted that the nine-month downtrend in the US NAHB Housing Market Index precedes the Building Permits to 1.517M in August versus 1.61M forecast and 1.685M prior. However, Housing Starts improved to 1.575M compared to 1.445M market consensus and 1.404M previous readings.

Against this backdrop, US 10-year Treasury yields rose to the highest level since February 2011, around 3.567% by the press time, whereas Wall Street closed in the red.

Looking forward, the Biden-Truss meeting and the UK’s political/Brexit updates may entertain traders ahead of the Fed’s announcements. While the 0.75% rate hike is already given, any surprises will be taken seriously and can move the GBP/USD prices.

Also read: Fed September Preview: Terminal rate projection is key

Technical analysis

A three-month-old support line, near 1.1330 by the press time, keeps offering bounce to the GBP/USD pair. The recovery moves, however, remains capped by the 5-DMA hurdle, around 1.1415 at the latest.

Additional important levels

Overview
Today last price 1.1376
Today Daily Change -0.0048
Today Daily Change % -0.42%
Today daily open 1.1424
 
Trends
Daily SMA20 1.1597
Daily SMA50 1.1862
Daily SMA100 1.2096
Daily SMA200 1.2695
 
Levels
Previous Daily High 1.1442
Previous Daily Low 1.1355
Previous Weekly High 1.1738
Previous Weekly Low 1.1351
Previous Monthly High 1.2294
Previous Monthly Low 1.1599
Daily Fibonacci 38.2% 1.1409
Daily Fibonacci 61.8% 1.1389
Daily Pivot Point S1 1.1372
Daily Pivot Point S2 1.132
Daily Pivot Point S3 1.1285
Daily Pivot Point R1 1.146
Daily Pivot Point R2 1.1495
Daily Pivot Point R3 1.1547

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD extends rebound to 1.0500 amid US Dollar weakness

EUR/USD extends rebound to 1.0500 amid US Dollar weakness

EUR/USD preserves its recovery momentum and trades near 1.0500 in the European session. Despite the risk-averse market atmosphere, the US Dollar is struggling to find demand ahead of mid-tier data releases, helping the pair hold in positive territory.

EUR/USD News

GBP/USD clings to recovery gains above 1.2150

GBP/USD clings to recovery gains above 1.2150

GBP/USD gained traction and climbed above 1.2150 during the European trading hours. The modest US Dollar weakness provides a boost to the pair as the market focus shifts to third-quarter Unit Labor Costs data from the United States.

GBPUSD News

Gold price struggles to gain traction, holds above $1,770

Gold price struggles to gain traction, holds above $1,770

Gold price is having a difficult time gathering bullish momentum and continuing to fluctuate in a tight range slightly above $1,770. The benchmark 10-year US Treasury bond yield holds steady above 3.5% ahead of US data, not allowing XAU/USD to find direction.

Gold News

JP Morgan joins forces with Ripple partner in the UAE, what this means for XRP price

JP Morgan joins forces with Ripple partner in the UAE, what this means for XRP price

JP Morgan will work alongside Al Fardan Exchange LLC in the United Arab Emirates (UAE) to power faster transaction settlement and transfers in fiat currencies.

Read more

S&P 500 (SPX) stocks slide further as market fears Fed

S&P 500 (SPX) stocks slide further as market fears Fed

Equity markets continued to retreat on Tuesday as investors continued to climb the worry wall ahead of the Fed decision next week. Oil fell, and that dragged oil stocks lower with the XLE and XOP both falling nearly 3%.

Read more

Forex MAJORS

Cryptocurrencies

Signatures