GBPUSD slides below 1.1800, Fed bets, UK’s Autumn Statement eyed

• GBPUSD retreats from 11-week high as market sentiment sours.
• Increasing odds of the Fed’s 50-bps rate hike favor buyers.
• Biden-Xi updates, light calendar and fears of tough guidance for the UK’s budget challenge previous upside.

GBPUSD takes offers to refresh the intraday low near 1.1750, and snaps a two-day uptrend during early Monday morning in Europe. The Cable pair’s latest losses could be linked to the market’s cautious mood ahead of the Group of 20 Nations (G20) meeting in Bali. Also teasing sellers could be the fears of harsh measures in the November 18 Autumn Statement to defend the British economy.

With the latest comments from US President Joe Biden and US Treasury Secretary Janet Yellen suggesting no relief to the US-China optimists, the sentiment turned sour ahead of the meeting between US President Biden and his Chinese counterpart Xi Jinping. Reuters quotes US President Biden as saying that the US communication lines with China would stay open to prevent conflict, with tough talks almost certain in the days ahead. The news also mentioned, “The United States would ‘compete vigorously’ with Beijing while "ensuring competition does not veer into conflict", said Biden, stressing the importance of peace in the Taiwan Strait during an address to the East Asia Summit in Cambodia. He arrived in Bali on Sunday night.” On the same line, US Treasury Secretary Janet Yellen also mentioned, per Reuters, “Biden-Xi meeting aimed at stabilizing u.s. relationship with china, but have been clear about national security concerns.”

It should be noted that Federal Reserve (Fed) Governor Christopher Waller said, “Rates will not fall until there is ‘clear, strong evidence’ inflation is falling,” which in turn curtailed the dovish bets on the Fed’s next moves. The policymaker, however, also mentioned that the Fed can begin to consider moving at a slower pace.

At home, Bloomberg came out with the news suggesting the UK Chancellor Jeremy Hunt may delay cuts to defend the British economy should have challenged the GBPUSD bears but the latest announcements suggesting more tax hikes and comments from UK Prime Minister Rishi Sunak weigh on the quote. “UK Chancellor Jeremy Hunt is expected to delay much of the £55 billion ($65 billion) of savings to fill the hole in the public finances until after the next election in an attempt to protect the economy and shore up Tory support as the country heads into recession,” said Bloomberg. Reuters quotes The Independent while stating, “The government must follow through on its promise of tax rises and spending cuts in this week's autumn statement or risk a market backlash destabilizing the UK economy, Rishi Sunak has said.”

Amid these plays, the S&P 500 Futures retreat from a one-month high, down 0.30% intraday near 3,990, whereas the US 10-year Treasury yields rise six basis points (bps) to 3.89%, printing the first daily gains in four.

It’s worth noting that the market’s consolidation could also be linked to the International Monetary Fund’s (IMF) comments that recently mentioned, “tightening monetary policy triggered by persistently high and broad-based inflation, weak growth momentum in China, and ongoing supply disruptions and food insecurity caused by Russia’s invasion of Ukraine,” as the key catalysts for gloomy outlook.

Looking forward, this week is important for the GBPUSD traders not only because it has the key data like Retail Sales and Consumer Price Index (CPI) for October but also because it will offer the Autumn Statement. Additionally, the Group of 20 Nations (G20) meeting in Bali will be eyed too as the UK and Europe are preparing to snub Russia there.

Given the recently increasing hopes of a 50 bps rate hike from the Fed in December, as well as the Bank of England’s (BOE) hawkish mood, the GBPUSD may witness further upside. However, the UK’s autumn statement and this week’s macros will be crucial for clear directions.

Technical analysis

Although a clear upside break of the 100-DMA favors GBPUSD buyers past 1.1655, nearly overbought RSI (14) restricts the Cable pair’s advances past the 78.6% Fibonacci retracement level of the pair’s August-September moves, near 1.1875.