The GBP/USD pair extends the previous day's retracement slide from levels just above the 1.1600 mark and edges lower through the first half of trading on Wednesday. The intraday slide, however, stalls just ahead of a two-and-half-year low touched earlier this week and allows spot prices to bounce back to the 1.1500 psychological mark. 

Investors will be looking for clues about the possibility of a supersized 75 bps rate hike in September, which, in turn, might influence sterling and provide some meaningful impetus to the GBP/USD pair. In the meantime, the prevalent strong bullish sentiment surrounding the US dollar continues to exert some downward pressure on the major, warranting caution before placing any bullish bets.

the rapid build-up in momentum is likely to lead to further advance in GBP’. However, we were of the view that a sustained rise above 1.1605 is unlikely. It was not wrong as GBP subsequently rose to 1.1609 before dropping back down to end the day little changed at 1.1517 (-0.05%). Downward momentum has improved a tad and GBP could edge lower but a sustained decline below 1.1465 is unlikely (next support is at 1.1415). On the upside, a breach of 1.1560 (minor resistance is at 1.1530) would indicate that the current mild downward pressure has eased.

 As highlighted, the recent GBP weakness has run its course and GBP is likely to consolidate and trade between 1.1465 and 1.1700 for now. Looking ahead, if GBP closes below Monday’s low near 1.1445, it would suggest the weakness in GBP has resumed

GBPUSD Depending Upon ECB Rates Hikes For Gains

Sep 07 2022