The GBP/USD pair experienced a sharp decline on Wednesday, plunging below the 1.3400 mark as risk appetite across markets waned and the US Dollar regained strength. After a bullish streak, the Pound Sterling pulled back as the broader market turned risk-averse, allowing the Greenback to recover recent losses. The shift in sentiment pushed Cable lower, ending its recent upward trend.
The economic calendar offers little to support the British Pound for the remainder of the week, leaving traders focused on Friday’s upcoming US inflation report. With no significant UK data on the horizon, GBP/USD will likely be driven by US developments, especially the Personal Consumption Expenditure (PCE) inflation figures, a key metric for the Fed's inflation outlook.
Meanwhile, in the US, consumer confidence hit a three-year low, reflecting concerns about inflation and economic conditions. New home sales in August also declined by 4.7%, while investors await the latest GDP growth update, expected to hold steady at 3.0%. Additionally, Thursday will bring speeches from several Fed officials, including Fed Chair Jerome Powell, which could influence further market movements.
As Cable continues to trade lower, short sellers may target the 50-day Exponential Moving Average (EMA) at 1.3062 for further downside potential, while GBP/USD bulls aim to reclaim the 30-month high of 1.3430 seen earlier this week.
