Pound continues to slide

GBPUSD pair briefly fell to 1.1300 level early in the session after recent data revealed that the UK budget deficit exceeded analysts’ estimates in August, with rising inflation weighing on interest accrued on government bonds. Meanwhile the dollar continues to strengthen as partial mobilization in Russia dampened demand for riskier currencies. Today market attention will focus on the highly anticipated FOMC decision. Fed is set to deliver a 75 bps rate hike for a third straight time and any additional hawkish comments from Powell may put further pressure on GBP. Meanwhile economists are unsure whether the Bank of England would raise its policy rate by 50 or 75 bp on Thursday, as the weak pound and UK government’s new energy cost package are clouding the rates outlook.

GBPUSD pair fell below the key support zone around 1.1425 where pandemic lows are located. As long as price sits below, continuation of the downward move is likely. On the flip side, bullish divergence occurred on the Momentum indicator, which indicates that a reversal could take place. Source: xStation5