GBP/USD faces fragile barricades below 1.1400 on bleak BOE outlook, risk-on still solid

• GBP/USD has witnessed a minor pause while advancing towards 1.1400.
• The risk-on impulse is still solid and S&P500 is holding gains.
• Fitch Ratings have revised the BOE sovereign outlook to Negative from Stable.

The GBP/USD pair has sensed a minor selling pressure while attempting to hit the immediate hurdle of 1.1400 in the Tokyo session. Investors are continued with their longs in risk-perceived currencies. The 10-year US Treasury yields have recovered the decline and have scaled above 3.75%. While, the S&P500 is not ready to surrender gains and is sustaining at elevated levels.

The US dollar index (DXY) has dragged firmly after failing to cross the immediate hurdle of 111.00. The DXY is expected to remain on the tenterhooks as investors are awaiting the release of the US Nonfarm Payrolls (NFP) for making informed decisions. As per the expectations, the US economy has added 250k jobs vs. the prior release of 315k.

It is worth noting that the US economy is operating at full employment levels for the past several months. Therefore, space for creating fresh jobs is extremely low. Apart from that, the Average Hourly Earnings data holds significant importance. The labor cost index data is expected to remain subdued as projections display a decline of 10 basis points (bps) to 5.1% on an annual basis.

On the UK front, investors are worried that poor economic fundamentals could drag the cable to parity. Analysts are divided, according to a Reuters poll in which the outcomes were 3.6% strong British battered pound in a year and parity.

The rollback of the memorandum of historic tax cuts by Finance Minister Kwarteng saved the UK economy from unveiling the biggest increase in borrowing since 1972. But what is haunting the pound bulls now is the negative outlook on Bank of England’s (BoE) Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) by Fitch Ratings. The revised outlook to Negative from Stable, affirming AA- could impact the recent rally in the pound vigorously.