GBP/USD to display more losses below 1.1900 ahead of Fed minutes

• GBP/USD is expecting more downside below 1.1900 on UK’s political jitters and BOE’s gloomy outlook.
• Volatile oil and raw-material prices may bring economic shocks in the future.
• The DXY has rebounded after a mild correction ahead of FOMC minutes.

The GBP/USD pair has failed to extend its modest rebound and has sensed barricades around 1.1970. The cable has tumbled below 1.1950 and is likely to display more losses after violating Tuesday’s low at 1.1898. Soaring recession fears after the warning signal from the Bank of England (BOE) have brought a sell-off in the risk-perceived currencies.

On Tuesday, the BOE dictated a gloomy outlook for the entire economy on the growth front. As per the statement from the BOE, volatility in the oil and raw-material prices will bring economic shocks in the future. A pessimist statement from the BOE is sufficient to activate risk-off in the global markets and to weaken the pound bulls.

Apart from that, market participants are punishing the sterling bulls on signs of political instability in their economy. The vice-chair of the UK Conservative Party, Bim Afolami, resigned and calls for PM Boris Johnson to stand down. The event has added severe volatility to the asset.

On the dollar front, the US dollar index (DXY) has rebounded after hitting a low of 106.40 in the Asian session. The DXY is likely to overstep its fresh 19-year high at 106.80 as investors are awaiting the release of the Federal Open Market Committee (FOMC) minutes. The investing community is aware of the fact that the Federal Reserve (Fed) announced a 75 basis point (bps) interest rate hike in June. The announcement of a 75 bps rate hike was the highest in the past 28 years. Therefore, reading the ideology behind the bumper rate hike announcement by Fed chair Jerome Powell is principal.