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GBP/USD hovers near two-week low as risk aversion rises
GBP/USD rebounded modestly from about 1.3485 but remains under pressure as money markets price roughly a 25 bps Bank of England hike before year end and Fed hawkishness lifts the odds of a September US rate move to about 66%.
GBP/USD is hovering near a two-week low after investors shifted toward lower-risk assets, citing concerns about an energy shock linked to a renewed escalation in the Middle East, Action Forex reports.
The pair attempted a rebound from around 1.3485 but struggled to gain traction. Markets are also processing statements from UK leadership, including Prime Minister Andy Burnham’s reaffirmation of fiscal discipline and a plan to bring forward the budget submission date to reduce speculation about future fiscal measures.
Action Forex also points to tightening expectations in the UK, with money markets continuing to price in a 25 basis point Bank of England rate hike before year end. That view has been reinforced by an acceleration in UK retail price inflation, but the pound faces additional pressure from a more hawkish stance attributed to the Federal Reserve.
On the US rate outlook, the outlet says Kevin Warsh’s hawkish comments and rising oil prices have pushed the estimated probability of a US rate hike in September to about 66%, supporting the dollar. Technically, the article highlights downside triggers around 1.3474 and 1.3450, while upside correction levels are cited near 1.3520 and a limited recovery range topping around 1.3510.
Latest closeGBP/USD 1.348 ▼0.2%