GBP/USD knocked lower on UK recession worries

The GBP/USD rose early in the US session but fell as the market was broadly pulled back towards the US dollar. The UK faces high recession risk, with Pound Sterling bids capped.

The GBP/USD sank just south of the 1.2200 handle, struggling under a bearish trend. The Bank of England is concerned about inflation, and the UK may face high interest rates.

Interest rate cuts are a distant dream for investors seeking to ease borrowing and funding costs. UK labour conditions deteriorate, and the manufacturing outlook remains pessimistic.

The US dollar is expected to remain well-bid through next week’s trading window due to an impending government shutdown. Pound Sterling fails to hold recovery as the US Dollar recovers.

The GBP/USD is currently pinned to the midpoint at the 34-hour Exponential Moving Average (EMA), with the midweek’s bounce from a near-term low if 1.2110 runs out of steam.