Pound Sterling exposed to downside due to potential risks of UK slowdown

The Pound Sterling (GBP) recovered after printing a fresh 14-week low, but the broader bias remains bearish as the British economy is exposed to a pos

Investors are worried that the UK economy could shift into a recession as the housing sector, economic activities and the labor market are struggling to carry the burden of a restrictive monetary policy. Likely, the risk of a slowdown has eased bets about the interest rate peak at 6.0%, but an interest rate hike at the September monetary policy meeting cannot be ruled out entirely.Pound Sterling delivers a recovery move after a sharp sell-off to near 1.2560 as the risk-off impulse eases.

Traders betting on an interest rate hike to 6.0% have trimmed, and now chances are the UK central bank will pause the tightening spell after pushing interest rates to 5.75%. Meanwhile, the BoE is preparing to raise interest rates further in September. UK central bank is expected to raise interest rates by 25 basis points to 5.50%.The market mood is upbeat as investors digested that the Federal Reserve will follow the ‘’higher for longer’’ interest rate path.

This week, investors will keenly focus on the US Nonfarm payrolls data, which will be published on Friday at 12:30 GMT. In addition to that, ISM Manufacturing PMI for August will also remain in focus.Pound Sterling upside seems restricted near the round-level resistance of 1.2600 as the UK economy is exposed to a possible recession due to high-interest rates. The Cable delivered a breakdown of the three-week support at 1.

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