November 9,2022 04:54 AM ET
By:AnalysisWatch
GBP/USD declines on Wednesday and moves away from one-week highs around the 1.1600 round figure touched the previous day.
The selling bias accelerates during the first half of the European session and drags spot prices to a new daily low around the 1.1470-1.1465 area in the last hour.
A combination of factors has contributed to the US dollar halting its recent slide to the lowest level since September 20, which, in turn, is seen as a headwind for the GBPUSD pair. Despite reduced bets on more aggressive policy tightening by the Fed, markets continue to price in at least a 50 basis point rate hike in December. This continues to support elevated US Treasury yields, which, together with the cautious mood prevailing in the market, offer some support for the dollar as a safe haven.
On the other hand, sterling continues to be hurt by the Bank of England's gloomy outlook for the UK economy. In fact, the UK central bank expects the recession to last throughout 2023 and the first half of 2024. Last week's Bank of England report also indicated a lower terminal peak than had been discounted in the markets. Apart from this, some weakness driven by an intraday rally in EURGBP weighs on sterling and contributes to the slightly offered tone of GBPUSD.
Meanwhile, the latest leg lower in the last hour could be attributed to some technical selling below the psychological 1.1500 mark. For the time being, the GBPUSD pair seems to have stalled its recent rebound from the mid-1.1100 levels and is at the mercy of the USD price dynamics. In the absence of relevant economic data in both the UK and the US, traders will be guided on Wednesday by speeches from New York Fed President John Williams and Richmond Fed President Thomas Barkin.