Pound falls to its weakest level against US dollar since Sept 20

The British Pound finished last week sharply lower against the US dollar, pressured by weak UK economic data, soaring US bond yields and some risk-off sentiment. During New York afternoon market hours, GBP/USD was down 1.44% to 1.2840 on the day and off 1.68% over the past five sessions, trading at lows not seen since September 2020.
Various UK reports, including retail sales, manufacturing output and services sector activity for March, surprised on the downside, a sign that the recovery is faltering and that the economy is starting the second quarter on a weaker footing as surging price pressures curtail demand.
With growth slowing rapidly, the Bank of England (BoE) may not be as aggressive as other central banks in its fight against inflation. This means that we may only see moderate interest rate increases in the coming months, rather than front-loaded hikes such as those entertained by the Federal Reserve, which is now seen raising borrowing costs by 50 bps at its meetings in May, June and possibly July.
Looking ahead, there is little reason to be optimistic about sterling. The increasing probability that the UK economy will contract in the second quarter and that the BoE’s normalization cycle will underwhelm expectations may keep GBP/USD subdued or prompt the next leg lower in the exchange rate.
In the event of a bounce, initial resistance lies at 1.2980/1.300, but if buyers manage to overcome this hurdle decisively, we cannot rule out a climb towards 1.3055, followed by 1.3200. However, the bullish case seems a far-fetched scenario at this point, with the bears firmly entrenched in the driver's seat judging by the current price action.