GBPUSD extends losses on Monday, with the pair registered fresh more than two-year lows around 1.2320, now threatening the 1.23 figure. After two bearish weeks, sterling remains under pressure from two major factors – stronger USD and growing threat of a no-deal Brexit.
The greenback remains on the offensive against major counterparts as the latest strong data from the US point to a lower probability of more aggressive stimulus measures from the Fed. The FOMC meeting concludes on Wednesday, with the doves could be disappointed if the FOMC tone on policy easing in the future comes not as soft as expected. Meanwhile, 25 bp rate cut has been fully priced in already. So there is a possibility that the dollar will rise across the board in such a scenario.
Besides, the bearish sentiment surrounding the pound has intensified as the expectations of leaving the EU without a deal on October 31 after the new UK PM Boris Johnson assembled a cabinet that advocates a hard-line stance about leaving the block. Additionally, GBP traders are cautious ahead of this week’s Bank of England ‘Super Thursday’ which is expected to express a more dovish rhetoric and put the sterling under additional pressure.