Pound Sterling surrenders recovery amid cautious market mood
The Pound Sterling (GBP) faces immense selling pressure and prints a fresh 11-week low due to the active risk-aversion theme. The GBP/USD pair is reeling from the Bank of England’s (BoE) aggressive policy of raising interest rates, which is threatening the economic outlook. Investors believe that the global economy will shift into a recession if central banks continue to tighten monetary policy.
The UK economy is expected to remain vulnerable as the BoE could be the laggard in pausing the policy tightening spell. Britain’s Consumer Price Index (CPI) is the highest among G7 economies, which warrants more rate hikes ahead. However, UK Finance Minister Jeremy Hunt assured the public that the administration is on track to bring down inflation to almost 5% by year-end. Pound Sterling retreats after facing selling pressure above the round-level resistance of 1.2600. The Cable drops vertically as market sentiment turns bearish. A decisive break below the September 1 low at 1.2577 will trigger a breakdown of the Inside candle chart pattern. The 20 and 50-day Exponential Moving Averages (EMAs) have already delivered a bearish crossover. The asset is declining toward the 200-day EMA, which trades below 1.2500.