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Thursday, February 2, 2023

GBPUSD drops below 1.1800 after UK autumn statements

  • GBPUSD is under strong selling pressure and is affected by a combination of factors.
  • A healthy rise in US bond yields and risk aversion have revived demand for the safe haven dollar.
  • The gloomy outlook for the UK economy weighed on the GBP and contributed to the intraday slide.

couple GBPUSD Finds new selling after initial rise in 1.1955-1.1960 zone. Intraday selling picks up in the middle of the European session. couple falls to fresh daily low at 1.1783And the bears now expect a sustained break below the rounding level of 1.1800.

The initial phase of the intraday fall was sponsored by Some buying presence around the US dollarWhich is getting some support from a nice rally in US Treasury yields. Sterling, meanwhile, weakened across the board after UK Chancellor of the Exchequer Jeremy Hunt presented the autumn budget to parliament., The combination of these mentioned factors puts downward pressure on the GBPUSD pair.

Upbeat US retail sales data on Wednesday is forcing market participants to lower their expectations for less aggressive tightening from the Federal Reserve. In addition, the US central bank is expected to raise interest rates by a relatively small amount, 50 basis points, at its next meeting in December. In turn, this acts as a tailwind for US bond yields, which together Weak risk tone provides some support for safe-haven dollar overall,

Sterling Bullock, for his part, Chancellor not impressed by Jeremy Hunt’s £55bn tax plan, Furthermore, the Office of Budgetary Responsibility (OBR) claims that the economy is already in recession. obr He now expects British GDP to fall 1.4% next year, compared to the 1.8% growth projection published in March., This is considered to be another factor weighing on the British pound.

The pair has recovered more than 225 pips from its nearly two-month highs hit earlier this week. and appears sensitive to further depreciation. The US economic calendar includes the Philadelphia Fed’s manufacturing index and weekly jobless claims. Also, speeches from a group of influential FOMC members will affect the dollar and give some momentum to the GBPUSD.

GBPUSD Technical Levels

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