GBPUSD snaps two-day uptrend to break 1.1900 on cautious mood ahead of UK Autumn Statement

• GBPUSD renews intraday low amid market’s cautious mood ahead of the key UK event.
• British government’s ability to tame economic fears and filling the hole in government finances will be keenly watched.
• US Dollar’s corrective bounce acts as an extra filter for trading.
• Second-tier US data, risk catalysts are also important for intraday directions.

GBPUSD takes offers to renew intraday low around 1.1880 during early Thursday. In doing so, the Cable pair registers the first daily loss in three, so far, while justifying the market’s cautious mood ahead of the UK’s key Autumn Statement.

The UK’s new government has bigger challenges than its predecessors as Prime Minister Rishi Sunak is more inclined towards placating the economic woes by announcing relief measures like easing energy bills, increasing the minimum wage and trying to keep tax hikes less problematic. That said, UK’s Chancellor Jeremy Hunt, on the other hand, is more interested in forming a tax structure that can fill the multi-billion British Pounds (GBP) worth of the hole.

It’s worth noting that Rishi Sunak’s less compulsive efforts to tighten the Bank of England’s (BOE) monetary policies, versus Liz Truss’ strong push for higher rates, also challenge the BOE hawks and weigh on the GBPUSD prices.

Even so, BOE Governor Andrew Bailey showed readiness to announce more rate hikes during Wednesday’s testimony. Also keeping the GBPUSD buyers hopeful is the mostly downbeat comments from the US Federal Reserve (Fed) policymakers despite strong US Retail Sales data.

On Wednesday, US Retail Sales growth rose by 1.3% MoM in October versus 1.0% expected and 0.0% prior. On the other hand, Kansas City Fed President Esther George and Fed Governor Christopher Waller both favored smaller increases in the benchmark rates going forward whereas San Francisco Fed President Mary Daly mentioned challenges to the US economic growth.

Elsewhere, Covid woes in China and fears of political deadlock in the US challenges the market sentiment and tease the GBPUSD sellers ahead of the key UK Autumn Statement. Ahead of the fiscal policy announcements, the Financial Times (FT) said, “Hunt’s Autumn Statement will intensify the financial hardship facing millions of Britons and begin years of austerity in public services, but the chancellor will claim the pain is necessary to curb soaring prices and restore faith in Britain.”

Technical analysis

Nearly overbought RSI conditions join the trader’s failure to cross a five-month-old resistance line, around 1.2025 by the press time, to challenge GBPUSD buyers. The pair’s downside, however, remains elusive unless the quote breaks the 100-DMA support near 1.1650.