GBP/USD bears attack 1.1400 support on FOMC showdown, BOE’s “Super Thursday” eyed

• GBP/USD holds lower ground near one-week low, pokes five-week-old support line.
• Fed’s 75 bps rate hike, Chairman Powell’s hawkish press conference propelled DXY of late.
• “Old Lady” is expected to announce 75 bps rate hikes, revise economic forecasts.
• Cable is up for a lose-lose situation unless BOE surprises markets.

GBP/USD holds onto post-Fed pessimism as it stays pressured around a seven-day low near 1.1400 during early Thursday morning in Asia. The Cable pair’s latest losses could be linked to the US Federal Reserve’s (Fed) rate action and Chairman Jerome Powell’s surprising press conference.

Fed’s 75 bps increase in the benchmark rate initially triggered the US dollar’s slump as the rate statement highlighted the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”  However, Powell’s speech propelled the greenback as it cited the need to bring down inflation “decisively” while also suggesting a bit longer play for the restrictive policy.

It’s worth noting that the strong points of the US ADP Employment Change for October and fears emanating from China’s covid-led lockdown, as well as a US diplomat’s visit to Taiwan, added strength to the US Dollar Index (DXY). That said, the greenback’s gauge versus the six major currencies refreshed a one-week high following the Federal Open Market Committee (FOMC) meeting.

Amid these plays, Wall Street closed in the red and the yields are back up with the 10-year benchmark rising to 4.10% by the end of Wednesday’s North American session.

Moving on, GBP/USD traders will pay attention to the Bank of England’s (BOE) monetary policy announcements for clear directions. The “Old Lady”, as the central bank is informally known, is likely to unveil a 75 bps rate hike but is also divided over the 50 bps move. Also increasing the importance of the event is the quarterly monetary policy statement that makes it the “Super Thursday”.

Given the fears of the UK’s recession, or maybe London is already in one, the BOE is less likely to impress the GBP/USD buyers even by announcing the 75 bps rate hike.

Also read: BoE Interest Rate Decision Preview: A close call between 50 bps and 75 bps, GBP/USD set to suffer

On the other hand, the second-tier US data and risk catalysts might also offer extra directives to the Cable pair.

Technical analysis

An upward-sloping support line from September 26, around 1.1395, precedes the 50-DMA support near 1.1350 to restrict the short-term GBP/USD downside. That said, the RSI (14) and MACD suggest further downside of the Cable pair.