The GBP/USD pair fell below a one-week high of 1.1600 on Wednesday. During the first half of the European session, people are more likely to sell, which drove spot prices to a new daily low between 1.1470 and 1.1465 in the hour before.

As a result of a combination of factors, the US Dollar has stopped falling and is now at its lowest level since September 20. This is bad news for the GBP/USD pair. Even though Fed policy tightening bets have gone down, the markets still expect at least a 50 bps rate hike in December. This makes US Treasury bond yields go up, which, along with cautious market behaviour, helps the safe-haven greenback.

The British Pound keeps getting weaker because the Bank of England’s forecast for the economy is not good. The UK central bank thinks that there will be a recession in 2023 and part of 2024. Last week, the BoE said that the final peak would be lower than what the markets thought.

The last drop may have been caused by technical selling below 1.1500. The recent rise in the GBP/USD pair from levels just below mid-1.1100s has stopped, and the pair is still at the mercy of how the USD price moves. In the absence of economic data from the UK or the US on Wednesday, traders will listen to New York Fed President John Williams and Richmond Fed President Thomas Barkin.

US bond rates and how people feel about taking risks will also drive up demand for the USD and the GBPUSD pair. Before the Preliminary UK Q3 GDP report comes out on Friday, people will be looking at the US consumer inflation numbers from Thursday. Key macro releases will determine the major direction.

Trade Idea

Investors should stay away from the risky GBP/USD pair.