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Market News GBP/USD falls again below 1.0700 as UK economic troubles, BOE, and Fed discussion are observed

GBP/USD falls again below 1.0700 as UK economic troubles, BOE, and Fed discussion are observed

GBP/USD reverses yesterday's corrective rebound from the all-time low. The IMF criticized the British government's and BOE's most recent actions. Both UK Chancellor Kwarteng and BOE Governor Pill failed to persuade bulls despite their optimism. European energy crises, stronger rates, and US data also weigh on prices before Fed and BOE policymaker statements.

Daniel Rogers
2022-09-28
371

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After a brief pause on flashing the record low, GBP/USD resumes its downward trajectory as cable bears praise the UK's economic difficulties and the positive drivers for the US dollar. Nevertheless, the intraday low was updated to 1.0686 during Wednesday's Asian session.

 

Reuters reported that the International Monetary Fund (IMF) publicly attacked Britain's new economic plan on Tuesday, following another drop in bond markets that prompted the Bank of England (BOE) to pledge a "significant" reaction to stabilize the economy.

 

Alternately, Bank of England (BOE) Chief Economist Huw Pill stated on Tuesday, "Normalizing monetary policy is not a competition between countries, and markets are occasionally uneasy with that." In a similar vein, British Finance Minister Kwasi Kwarteng attempted to appease GBP/USD bears by stating that a credible strategy to cut debt-to-GDP will be developed.

 

Leaks in Russia's Baltic Sea gas pipeline heighten concerns that the Eurozone's energy supply issues are likely to be permanent. The same exacerbates fears of a recession within the bloc, particularly in the absence of remarkable data and inflationary concerns.

 

US Durable Goods Orders decreased by 0.2% in August vs market expectations of -0.4% and the revised down prior reading of -0.1%. The US Dollar Index (DXY) remained slightly bid around the two-decade high. In addition, US CB Consumer Confidence increased for the second consecutive month in September, reaching 108.00 vs 104.5 anticipated and 103.00 previously.

 

Despite the optimistic data, Chicago Fed President Charles Evans stated, "At some point, it will be necessary to reduce the rate of rate hikes and hold rates for a while to analyze the impact on the economy." Reuters reported that the president of the Federal Reserve Bank of St. Louis, James Bullard, stated that the United States has a major inflation problem. There will be additional rate hikes at future meetings. Neel Kashkari, president of the Minneapolis Fed, added that the central bank is acting "extremely aggressively" and there is a strong risk of "overdoing it."

 

Wall Street ended with a mixed performance as rates rose, which allowed the S&P 500 Futures to remain lethargic near a three-month low.

 

Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, is scheduled to deliver a speech that will be keenly scrutinized for hints about the BOE's next step amid rumors of a 1% rate hike. In addition, Fed Chairman Jerome Powell will deliver a speech that will interest GBP/USD traders.


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