GBPUSD falls below 1.1800 after Waller’s remarks

• GBPUSD dipped from last week’s highs around 1.1850.
• Fed’s Waller: It could go up 50 basis points at the December meeting or the next one.
• Following Waller’s remarks, the dollar rose and GBPUSD fell below 1.1800.
• British pound to continue to trade choppy ahead of UK budget release Thursday.

Sterling fell from last week’s highs above 1.1800 against the US dollar (USD) after a Federal Reserve (Fed) official declared a 50 basis point move is on the radar for the next meeting. or the next. Therefore, a risk aversion impulse limited the recovery of the pound sterling, strengthening the dollar. At time of writing, GBPUSD is trading at 1.1734, down 0.80% from opening price.

Hawkish comments from the Fed boosted the US dollar

Amid the lack of US economic data on the calendar, investors are leaning on statements from Fed officials, particularly Christopher Waller. Waller said that the Fed “still has some way to go” to raise rates and commented that the US central bank could moderate the size of interest rate hikes to 50 basis points at its December meeting or the nextand reiterated that the Fed is nowhere close to pausing.

The market reacted negatively to the statements as GBPUSD dipped below 1.1800, while the greenback rallied, as shown by the Dollar Index (DXY), which rose 0.56% to 107.031. Looking at US Treasury yields, after Friday’s holiday, the 10-year Treasury yield hit a daily high of 3,904% before falling to 3,863%.

Meanwhile, the British pound is expected to trade hard as investors await Thursday’s UK budget as Chancellor Jeremy Hunt is expected to release a fiscally responsible package of measures. Newswires reported that around 40% of the £55bn in savings would come from tax increases and 60% from spending cuts.

Scotiabank analysts see key support around 1.1550, but GBPUSD needs to break above 1.1625/35 first. To the upside, a break above 1.2045 is the first resistance level.

What to watch out for

UK employment figures for September will be released on Tuesday. In the US, the New York Empire Manufacturing Index for November, the Producer Price Index (PPI) for October and Fed speakers such as Patrick Harker, Lisa Cook and Michael Barr.

GBPUSD Price Analysis: Technical Outlook

From a daily chart point of view, GBPUSD has a neutral bias after rallying above the 100-day EMA. In particular, a drop below the daily high of 13 September at 1.1738 would open the door for further losses. Why? Fundamental data out of the UK would likely keep the pressure on the British pound so GBPUSD could test the 100 day EMA at 1.1652. Once broken, the next support would be the psychological figure at 1.1600, followed by the daily high of 5th October, which became support, at 1.1495.