Forex News

10:08:49 26-09-2022

GBP/USD pares losses above 1.0600 at all-time low, braces for BOE meddling

  • GBP/USD picks up bids to extend corrective bounce off the record low prices.
  • UK Opposition Labour Finance Spokesperson Rachel Reeves teased unscheduled BOE rate hike.
  • British military intelligence spots the start of Russia's partial mobilization of troops.
  • Risk catalysts are important but BOE’s intervention could offer the much-needed bounce to the Cable.

GBP/USD consolidates the daily loss around the record low, picking up bids to 1.0660 heading into London open on Monday, amid talks of the Bank of England’s (BOE) rate hike.

As per the latest updates, GBP/USD traders price 150 basis points (bps) of the BOE rate hike by November. Also fueling the cable of late could be the comments from UK Opposition Labour Finance Spokesperson Rachel Reeves who said, “The fall in sterling puts pressure on the Bank of England to raise interest rates.” The shadow Chancellor also mentioned that She is incredibly worried about the market reaction to the mini-budget.

The Cable pair slumped to the all-time bottom earlier in the day amid fears that the UK’s fiscal package won’t be able to cure the British economic problems. On top of that, the Labour Party leader criticised the tax cut efforts and amplified the pair of the GBP/USD buyers.

Elsewhere, headlines suggesting Japan’s ban on goods related to chemical weapons to Russia and the European Crisis Response Working Group’s meeting to discuss the gravity of situations also weigh on the risk appetite and probe the GBP/USD bulls. It should be noted that the US warned of "catastrophic consequences" if Moscow were to use nuclear weapons in Ukraine and propelled the risk-off mood, as well as the US dollar, during the early day.

Amid these plays, S&P 500 Futures dropped near 0.80% and the US 10-year Treasury yields remain firmer the highest levels since 2010. Further, the US 02-year bond coupons refreshed the 15-year top to 4.30% at the latest.

Moving on, GBP/USD remains at the mercy of the BOE intervention and could plummet if the “Old Lady”, as the central bank is mostly known, disappoints the pair traders.

Technical analysis

GBP/USD buyers need validation from the year 2020 low near 1.1410 to justify the recovery moves.


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