GBP/USD falls to its lowest level since March 2020 on fears that the UK economy may be headed for an imminent recession. The British pound maintains a bearish outlook against the U.S. dollar over the medium term.
, Chairman Powell said in no uncertain terms that restoring price stability will likely require maintaining a restrictive stance for some time and cautioned against prematurely loosing policy, pouring cold water on the idea that policymakers will start slashing borrowing costs next year to counter economic weakness.
The Fed’s hawkish posture should keep U.S. yields skewed to the upside, offering support to the U.S. dollar. Moreover, the USD could receive another boost if the tightening roadmap causes sentiment to deteriorate further and triggerIn the current environment, it is difficult to be bullish on GBP/USD. While temporary bounces in the exchange rate are possible and should not be entirely ruled out, the path of least resistance appears to be lower, at least in the medium term.
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