GBP/USD eyes a break below 1.1350 as odds for widening Fed-BOE policy divergence soar


  • GBP/USD is likely to display a vertical downside move after surrendering the critical support of 1.1360.
  • Fed’s full percent rate hike will widen the Fed-BOJ policy divergence.
  • UK’s labor market and growth projections do not support further policy tightening.

The GBP/USD pair is hovering around the critical support of 1.1360 in the Asian session. The asset is expected to witness a sheer downside after dropping below the support mentioned above on expectations of widening Federal Reserve (Fed)-Bank of England (BOE) policy divergence.

The scheduled monetary policy meeting of the Fed on Wednesday is expected to conclude with a third consecutive 75 basis points (bps) rate hike or to a greater extent, with hawkish guidance and a bleak growth outlook. Price pressures have failed to display meaningful exhaustion signals led by higher-than-expected August inflation print readings for both headline Consumer Price Index (CPI) and core CPI. Therefore, the Fed has no option but to paddle up the pace of hiking interest rates.

Well, there is no denying the fact that the BOE will also hike its interest rates in its monetary policy meeting scheduled on Thursday. The UK households are also facing the headwinds of forced inflated payouts. Growth prospects and labor market conditions are not lucrative for tightening the policy. Despite that BOE Governor Andrew Bailey will swallow the bitter gulp and is expected to announce a rate hike by 50 bps. The expectations of a higher rate hike extent by the Fed are supporting the greenback bulls.

This week, the UK economy will also report the S&P Global PMI. The Manufacturing and Services PMI are seen at 47.5 and 50 respectively. A mixed performance is expected by the UK economy on the PMI front.

GBP/USD

Overview
Today last price 1.1374
Today Daily Change -0.0007
Today Daily Change % -0.06
Today daily open 1.1381
 
Trends
Daily SMA20 1.1574
Daily SMA50 1.1852
Daily SMA100 1.2085
Daily SMA200 1.2686
 
Levels
Previous Daily High 1.1461
Previous Daily Low 1.1357
Previous Weekly High 1.1738
Previous Weekly Low 1.1351
Previous Monthly High 1.2294
Previous Monthly Low 1.1599
Daily Fibonacci 38.2% 1.1397
Daily Fibonacci 61.8% 1.1421
Daily Pivot Point S1 1.1338
Daily Pivot Point S2 1.1296
Daily Pivot Point S3 1.1234
Daily Pivot Point R1 1.1442
Daily Pivot Point R2 1.1504
Daily Pivot Point R3 1.1546

 

 

 

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD holds steady near 0.6250 ahead of RBA Minutes

AUD/USD holds steady near 0.6250 ahead of RBA Minutes

The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia Minutes released on Tuesday for some insight into the interest rate outlook.

AUD/USD News
USD/JPY consolidates around 156.50 area; bullish bias remains

USD/JPY consolidates around 156.50 area; bullish bias remains

USD/JPY holds steady around the mid-156.00s at the start of a new week and for now, seems to have stalled a modest pullback from the 158.00 neighborhood, or over a five-month top touched on Friday. Doubts over when the BoJ could hike rates again and a positive risk tone undermine the safe-haven JPY. 

USD/JPY News
Gold price bulls seem non-committed around $2,620 amid mixed cues

Gold price bulls seem non-committed around $2,620 amid mixed cues

Gold price struggles to capitalize on last week's goodish bounce from a one-month low and oscillates in a range during the Asian session on Monday. Geopolitical risks and trade war fears support the safe-haven XAU/USD. Meanwhile, the Fed's hawkish shift acts as a tailwind for the elevated US bond yields and a bullish USD, capping the non-yielding yellow metal.

Gold News
Week ahead: No festive cheer for the markets after hawkish Fed

Week ahead: No festive cheer for the markets after hawkish Fed

US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.

Read more
Bank of England stays on hold, but a dovish front is building

Bank of England stays on hold, but a dovish front is building

Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures