GBP/USD hits fresh multi-week high, eyes 1.1600 mark amid notable USD supply

• GBP/USD climbs to a fresh six-week high and is supported by a combination of factors.
• The appointment of Rishi Sunak as the new British PM continues to underpin sterling.
• Diminishing odds for more aggressive Fed rate hikes weigh heavily on the greenback.

The GBP/USD pair catches fresh bids during the early European session and climbs to its highest level since September 14, around the 1.1575-1.1580 region in the last hour.

Investors welcomed the appointment of Rishi Sunak as the new British Prime Minister. This is evident from a further decline in the UK gilt yields, which continues to underpin the British pound. Apart from this, the prevalent US dollar-selling bias provides an additional lift to the GBP/USD pair and remains supportive of the momentum.

In fact, the USD Index, which measures the greenback’s performance against a basket of currencies, dives back closer to the monthly low amid reduced bets for a more aggressive tightening by the Fed. Tuesday's weaker US macro data pointed to signs of a slowdown in the world's largest economy and might force the Fed to soften its hawkish stance.

The repricing of the Fed's rate-hiking path leads to an extension of the recent downfall in the US Treasury bond yields, which, in turn, is seen weighing on the buck. Adding to this, signs of stability in the financial markets dents the greenback's safe-haven status and support prospects for a further appreciating move for the GBP/USD pair.

Even from a technical perspective, a convincing break through the 1.1480 supply zone and a subsequent move beyond the 1.1500 psychological mark adds credence to the positive outlook. That said, worries about a deeper global economic downturn might cap the optimism and hold back bulls from placing aggressive bets around the GBP/USD pair.

Market participants now look forward to the release of New Home Sales data from the US. This, along with the US bond yields and the broader risk sentiment, will drive the USD and provide some impetus to the GBP/USD pair ahead of important US macro releases on Thursday. The focus will then shift to the FOMC meeting and the NFP report next week.

Technical levels to watch