GBP/USD steadies below 1.1000 after BOE’s Bailey favored bears, UK data, Fed Minutes eyed

• GBP/USD licks its wounds at fortnight low, pauses five-day downtrend.
• BOE Governor Andrew Bailey propelled risk aversion by discussing FPC’s market intervention.
• UK jobs report was mostly encouraging but failed to impress buyers as the “Old Lady” widened space for Gilt operations.
• Monthly data dump, FOMC Meeting Minutes to entertain traders but bears to keep the reins.

GBP/USD portrays a corrective bounce from a two-week low surrounding 1.0953 as it licks its wounds around 1.0980 during early Wednesday morning in Asia. In doing so, the Cable pair traces downbeat comments from Bank of England (BOE) Governor Andrew Bailey and the broad risk-aversion wave.

That said, global markets were pretty sluggish ahead, mildly positive, ahead of the speech from Andrew Bailey’s late Tuesday speech that amplified risk-off mood by citing the Financial Policy Committee’s (FPC) decision to intervene in the financial market after noting market volatility surpassed the bank stress test. It should be noted that the BOE expanded their gilt buying program to include inflation-linked gilts for the remainder of their intervention (due to finish on 14 October, UK time).

On a different page, UK’s headline Claimant Count Change rose by 25.5K during September versus expectations of -11.4K and 6.3K prior. Further, the ILO Unemployment Rate dropped below the 3.6% market forecasts and prior readings to 3.5% during the three months to August.

It should be noted that the mildly positive yields and the US dollar’s rebound appeared to have exerted additional downside pressure on the GBP/USD prices.

Further, the International Monetary Fund (IMF) lowered the global economic growth forecast for 2023 to 2.7% from 2.9% estimated in July. The IMF cited pressures from high energy and food cost, rate hikes as the key catalysts for the move. It’s worth noting that the Washington-based institute left the 2022 growth forecast unchanged at 3.2% versus 6.0% global growth in the 2021"

Amid these plays, Wall Street benchmarks closed mixed after a volatile day while the US 10-year Treasury yields ended Tuesday with mild gains around the multi-month high marked the previous day.

Moving on, GBP/USD is likely to remain bearish amid the downbeat headlines surrounding the “Old Lady”, as the BOE is mostly known. Also weighing on the quote are the geopolitical fears and recession woes discussed above. As a result, today’s UK data dump and Fed minutes will be analyzed to determine the strength of the latest rebound, as well as check the bearish bias amid more favor for the sellers.

Technical analysis

Not even short-term buyers can think of GBP/USD unless the quote rises past convergence of the 21-DMA and 10-DMA, around 1.1165-70.