The GBP/USD pair enters a bearish consolidation phase during the Asian session on Tuesday and oscillates in a range just above its lowest level since
March 17 touched the previous day. Spot prices currently trade around the 1.2220 area, though the fundamental backdrop favours bearish traders and supports prospects for an extension of the well-established downtrend witnessed over the past two months or so.
The US Dollar stands tall near the YTD peak set on Monday and is seen as a key factor that continues to act as a headwind for the GBP/USD pair. The Federal Reserve stuck to its hawkish stance at the September policy meeting last week and reiterated the 'higher-for-longer' interestnarrative. In fact, the US central bank warned that still-sticky inflation was likely to attract at least one more interest rate hike by the end of this year.
Furthermore, the incoming resilient US macro data supports prospects for further policy tightening by the, which remains supportive of the recent blowout rally in the US Treasury bond yields and underpins the Greenback. The yield on the rate-sensitive two-year US government bond touched a 17-year peak and the benchmark 10-year Treasury yield climbed beyond the 4.50% threshold for the first time since 2007.
The UK central bank decided to keep the main policy rate unchanged, at a 15-year high level of 5.25%, ending a run of 14 straight hikes since December 2021 in the wake of the recent deceleration of inflation and signs that economic growth is slowing. This, in turn, supports prospects for a further depreciating move for the GBP/USD pair, though the extremely oversold Relative Strength Index on the daily chart holds back bearish traders from placing fresh bets.
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