GBP/USD drops back below 1.0700 on UK’s economic woes, BOE, Fed chatters eyed

• GBP/USD fades the previous day’s corrective bounce off the all-time low.
• IMF criticized the latest moves from British government, BOE.
• UK Chancellor Kwarteng remains optimistic, BOE’s Pill also tried to convince bulls but both failed.
• European energy crisis, firmer yields and US data also weigh on the prices ahead of speeches from Fed, BOE policymakers.

GBP/USD resumes a downtrend, after a brief pause on flashing the record low, as the cable bears cheer the UK’s economic hardships and the upbeat catalysts for the US dollar. That said, the quote refreshed intraday low to 1.0686 during Wednesday’s Asian session.

The International Monetary Fund (IMF) openly criticized Britain's new economic strategy on Tuesday, following another slide in bond markets that forced the Bank of England (BOE) to promise a "significant" response to stabilize the economy, reported Reuters.

Alternatively, "Normalizing monetary policy is not a race between countries and markets are sometimes uncomfortable with that," Bank of England (BOE) Chief Economist Huw Pill said on Tuesday. On the same line, British Finance Minister Kwasi Kwarteng also tried to placate GBP/USD bears while saying that they will have a credible plan to reduce debt-to-GDP.

Elsewhere, Leaks in Russia’s gas pipeline in the Baltic Sea raise woes that the Eurozone’s energy supply problems are likely to be permanent. The same intensify fears of recession inside the bloc, especially amid an absence of impressive data and inflation fears.

The US Dollar Index (DXY) remained mildly bid around the two-decade high as US Durable Goods Orders declined by 0.2% in August versus the market forecasts of -0.4% and the revised down prior reading of -0.1%. Additionally, US CB Consumer Confidence improved for the second consecutive month to 108.00 for September versus 104.5 expected and 103.20 prior.

Despite the upbeat data, Chicago Fed President Charles Evans said, “At some point, it will be appropriate to slow the pace of rate increases and hold rates for a while to assess the impact on the economy." However, markets cared more for St. Louis Federal Reserve Bank President James Bullard who mentioned that they have a serious inflation problem in the US, as reported by Reuters. "More rate rises to come in future meetings." Additionally, Minneapolis Fed President Neel Kashkari said the central bank is moving "very aggressively," and there is a high risk of "overdoing it." 

While portraying the mood, Wall Street closed mixed and yields were firmer, which in turn allowed the S&P 500 Futures remain sluggish around a three-month low.

Moving on, Deputy Governor for Financial Stability of the Bank of England Sir Jon Cunliffe is up for a speech and will be watched closely for clues about the BOE’s next move, amid chatters over a 1.0% rate hike. Further, Fed Chairman Jerome Powell will also speak and can entertain the GBP/USD traders.

Technical analysis

Unless crossing the 5.5-year-old support line, now resistance around 1.0970, the GBP/USD pair remains on the bear’s radar.