GBP/USD traded steady to higher on Thursday after losing overnight gains above 1.3100 nL2N2W50KQ, and sterling risks tumbling to new 2022 lows below 1.3000 after minutes of the latest ECB meeting nF9N2UZ00F hinted at a less dovish as conditions for raising rates had either been met or were about to be met.
GBP/USD is already under pressure from Fed-BoE rate divergence, which has pushed the pound from early March highs by 1.3437 to current levels by 1.3070 after the BoE embraced a more temperate view of rate hikes to foster growth while fighting inflation.
Additional downward pressure from EUR/GBP buyers as the ECB eyes normalization, could exacerbate GBP/USD selling, putting support at the March 16 low by 1.3036 and 2022 low by 1.30 in focus.
Ramped up hawkish rhetoric by other developed market central banks like the RBA, and BoC adds additional pressure as the BoE risks relegating the pound to the low-rate tier alongside the yen, which is down 7.6% year-to-date versus the dollar amid dovish BOJ expectations.
Should the BoE remain on its current dovish rate-hike path, sterling is likely to test early November lows by 1.2854 as traders shy away from low-yielding currencies.
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