GBP/USD resumes slide, hits fresh weekly lows under 1.3580

• Stronger US dollar sends cable to weekly lows.
• Pound fails to benefit from BoE rate hike expectations.
• GBP/USD falling for the third consecutive day, extends retreat.

The GBP/USD pair failed to recover 1.3600 and dropped further falling to 1.3572, hitting a fresh weekly low. It remains near the lows, under pressure amid a stronger US dollar and as equity prices tumble in Wall Street.

Weaker than expected US economic data (unexpected decline in the Empire Manufacturing Index) weakened the dollar only for a few minutes. The combination of higher US yields and risk aversion, are boosting the dollar. The DXY is up by 0.7%, at 95.60.

The Dow Jones is falling more than 500 points or 1.50%, while the Nasdaq slides 1.38%. European markets are also in red, falling on average 0.85%.

Earlier on Wednesday, data showed positive numbers of the UK labor market. The unemployment rate dropped to 4.1%, the lowest since June 2020.  The numbers help keep at elevated levels expectations about another rate hike from the Bank of England at the next meeting.

“The hawkish BOE outlook that had helped sterling outperform is getting crowded out a bit lately by the more hawkish Fed outlook”, explained analysts at Brown Brothers Harriman. They see the next target at 1.3550 and warn that a break lower “would set up a test of the January 3 low near 1.3430.”

Technical levels