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Aug 23 - 11:55 AM

GBP/USD - COMMENT-Sterling Slides Post-PMI As UK Rate Advantage Erodes Further

By Paul Spirgel  —  Aug 23 - 10:10 AM

GBP/USD fell on Wednesday, hitting a new 7-week low at 1.2615 after below-forecast UK August PMI data indicated the BoE's 14 rate hikes are slowing Britain's economy, with the dip below 100-day moving average support at 1.2636 giving bears license to target the lower 30-day Bolli at 1.2557.

Other targets include a series of daily lows on the way to 200-DMA support by 1.2392, though a disappointing U.S.
round could temper that slide.

Despite the slide, sterling remains the best performing major currency versus the dollar year-to-date as UK inflation, and consequently British rates, remain the highest among G7 nations.

While markets continue to project a further 60bp of BoE hikes, to 5.8%, by February 2024, this is down from 6.5% foreseen in early July.
That diminished rate outlook, coupled with high-for-longer Fed expectations, has pushed GBP/USD from last month's 2023 high of 1.3144 to current levels in the low 1.26's.

Should Fed Chair Jerome Powell maintain his current less-dovish Fed rate stance on Friday, GBP/USD's descent is likely to gain momentum.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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