• Pound Sterling finds offers as BoE’s aggressive policy threatens economic outlook.
• The United Kingdom economy could face recession as the interest-rate hiking spell is not over yet.
• UK Treasury Advisers said that the central bank should slow down the rate-hike spell to prevent the economy from a recession.

The Pound Sterling (GBP) shows a marginal corrective move on Thursday as deepening fears of a recession in the United Kingdom economy corner aggressive policy tightening by the Bank of England (BoE). The GBP/USD pair faces pressure but overall sentiment for Pound Sterling is bullish as more interest-rate hikes from the UK central bank cannot be ruled out in order to bring inflation back to target.

United Kingdom’s Treasury Advisers showed concerns about economic growth due to the aggressive policy tightening by the central bank, which has elevated the burden on firms. Moreover, the UK’s housing sector is facing the wrath of higher borrowing costs and demand for property from first-time home buyers has dropped sharply.

Daily Digest Market Movers: Pound Sterling faces pressure ahead of BoE decision

• Pound Sterling faces short-term pressure as hopes of further policy tightening by the Bank of England deepen fears of a recession in the United Kingdom.
• Advisers to UK Finance Minister Jeremy Hunt have flagged concerns over deepening recession risks as the BoE has sharply raised interest rates.
• The seven-member Economic Advisory Council is of the view that the central bank should slow down its rate-hiking spree, which is the fastest in three decades, as some economic indicators are suggesting a potential slowdown ahead for the economy.
• Inflation in the UK softened beyond expectations in June, but is insufficient to offer relief to BoE policymakers for skipping an interest-rate hike in August.
• Headline Consumer Price Index (CPI) softened to 7.9% in June while core CPI,  which excludes volatile food and energy prices, fell to 6.9%. However, these declines are insufficient to allow the BoE to announce victory over inflation.
• In spite of elevating recession fears and the increasing burden on firms, the BoE looks set to raise interest rates again on August 3.
• The BoE is expected to announce an interest-rate hike of 25 basis points (bps), which will push interest rates to 5.25%.
• A Reuters poll this week conveyed that interest rates in the UK economy could peak around 5.75%.
• A survey from the UK’s Royal Institution of Chartered Surveyors (RICS) showed Wednesday that 68% of respondents believe that the housing sector has turned vulnerable in the face of higher borrowing costs.
• Despite rising interest rates, car production has increased for a fifth straight month as chip shortages have eased. The Society of Motor Manufacturers and Traders (SMMT) reported an increase in the delivery of cars from factory gates by 16% on an annual basis.
• Meanwhile, the overall market mood is upbeat as the Federal Reserve (Fed) said it would consider incoming data for further interest rate hikes.
• The Fed announced a 25 bps interest-rate hike on Wednesday and pushed interest rates to 5.25%-5.50% range after a skip in June.
• An absence of confirmation of further policy tightening by Fed Chair Jerome Powell trimmed fears of a recession in the United States meaningfully.
• Powell also confirmed the central bank’s staff no longer forecasts a US recession.
• After the Fed’s policy meeting hangover, investors are shifting their focus toward preliminary Gross Domestic Product (GDP) data, which will be published at 12:30 GMT. On an annualized basis, the US economy is seen expanding at a pace of 1.8%, lower than the 2.0% registered in the first quarter.

Technical Analysis: Pound Sterling continues winning spell

The Pound Sterling continues its two-day winning spell and prints a fresh weekly high at 1.2976. The Cable rebounded firmly after discovering solid demand marginally below the 20-day Exponential Moving Average (EMA). The asset has resumed its north-side journey and is expected to reclaim the psychological resistance of 1.3000.

A breach above 60 in the Relative Strength Index (RSI) (14) will likely trigger the bullish momentum.