GBP/USD dips further below 1.2300 amidst US Dollar strength, BoE rate cut speculations

• GBP/USD falls to 1.2264, marking a 0.63% decline amid a strengthening US Dollar.
• The Pound is weighed down by comments from BoE's Chief Economist Huw Pill, suggesting possible rate cuts in 2024.
• Fed officials present mixed views, with Kashkari noting the economy's strength and Goolsbee acknowledging progress on inflation.

GBP/USD extends its losses past the 1.2300 figure after failing to decisively crack the 200-day moving average (DMA) due to overall US Dollar (USD) strength despite falling US bond yields. The major exchanges hands at 1.2264, down 0.63%.

Sterling falls as the US Dollar gains ground, with BoE's hints at potential rate cuts adding to the downward pressure

Market sentiment remains upbeat, which would usually underpin the GBP/USD. Still, the latest comments from the Bank of England (BoE) Chief Economist Huw Pill, saying that rate cuts could be possible in mid-2024, exacerbated further Pound Sterling (GBP) weakness.

UK’s risks of entering a recession could set the faith of the GBP/USD pair. Weak consumer spending and a higher cost of living for households has witnessed growing pessimism amongst British after an Accenture and YouGov poll showed that two-thirds of UK adults are not interested in participating in Black Friday and Cyber Monday due to the deepening costs of living crisis.

On the US front, Federal Reserve officials continue to cross newswires, led by Minnesota’s Fed President Neil Kashkari, who pushed back against the market's ‘dovish’ perception, saying that the economy's robustness raises the question of whether “is (policy) as tight as we (Fed) assume it currently is.” He added an uptick in inflation would warrant further tightening.

On the dovish side, Chicago Fed President Austan Goolsbee stated that progress in inflation had been made and added the conversation of how high rates need to be, which could shift to how long it would take to keep rates at this level.

Ahead of the week, the UK economic docket will feature a speech by Governor Andrew Bailey on Wednesdays and Gross Domestic Product (GDP) figures for Q3 on Friday. On the US front, the calendar will feature many Fed speakers led by Chairman Jerome Powell, speaking on Wednesday and Thursday. On the data front, unemployment claims and Consumer Sentiment would update labor market data and inflation expectations, seen as essential data for the Fed.

GBP/USD Price Analysis: Technical outlook

The GBP/USD depicts a bearish bias in the near term after failing to crack 1.2400. Consequently, the pullback surpassed the last cycle high at 1.2337, opening the door for deeper losses. Buyers need to keep prices above the October 24 swing high at 1.2288 if they want to remain hopeful for higher prices. Otherwise, the pair would extend its losses, with sellers targeting 1.2069, the October 26 low.