British Pound (GBP) Is Affected By The Prospect Of British Economy

Solid Wage Growth in Poland Signals Improving Labor Market Conditions

Sterling falls to 2.5 year low

The British pound is down sharply today as the downward trend continues. In the North American session, GBP/USD is trading at 1.1629, down 0.65%. We haven’t seen the pound at such low levels since March 2020.

A gloomy outlook for the UK economy continues to weigh on the pound. The Bank of England has projected that inflation will hit 13%, and some forecasts expect inflation to rise even higher. On Monday, Goldman Sachs said it expected the UK to tip into a recession in the fourth quarter of 2022 and projected that the economy would decline by 0.6% in 2023.

The US dollar flexed some muscles on Friday, after a hawkish speech from Fed Chair Powell at the Jackson Hill Symposium. Powell’s brief speech went straight to the point, stating that the Fed would continue raising rates until inflation was brought under control. Powell pointedly said that one or two weak inflation reports would not cause the Fed to pivot on its aggressive policy, a veiled reference to the market euphoria which followed after July’s inflation rate dropped unexpectedly, as speculation rose that the Fed would make a U-turn on policy.

Powell’s speech removed any doubts about the Fed’s plans to continue raising rates, but the size of the increases will depend on key economic data, not just inflation. Overshadowed by Jackson Hole, US Personal Income and Spending data was weaker than expected. As well, the Core PCE index, the Fed’s preferred inflation indicator, fell to 6.3%, down from 6.8% and below the forecast of 7.4%. The US economy is showing signs of slowing down, and the markets will be keeping a close eye on Friday’s non-farm payroll report. If NFP is weaker than expected, we could see the likelihood for a 50 basis point increase. Currently, the markets have priced in a 66.5% likelihood of a 75bp hike, versus 33.5% for a 50bp increase, according to CME’s FedWatch.

GBP/USD Technical

  •  GBP/USD is testing support at 1.1672. Below, there is support at 1.1604
  • There is resistance at 1.1786 and 1.1854



This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

British pound can't find its footing - MarketPulseMarketPulse

Solid Wage Growth in Poland Signals Improving Labor Market Conditions

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.