Pound Declines In Cautious Trade

The pound fell against its most major counterparts in the European session on Wednesday, amid uncertainty about further monetary policy tightening by the U.S. Federal Reserve and the prospect of a slowdown in economic growth.

Warnings from leading bankers about the chances of a recession also dampened risk sentiment.

Recent strong data prompted traders to re-evaluate the path of future interest rate hikes.

Markets now expect the Fed's terminal rate to cross 5 percent by May 2023.

U.S. treasury yield curve remained inverted, in a sign of impending economic recession.

The pound touched 1.2106 against the greenback, its lowest level since December 1. If the pound falls further, 1.19 is likely seen as its next support level.

The pound remained lower against the franc, at a 6-day low of 1.1410. The pound is seen finding support around the 1.11 level.

The pound weakened to 0.8643 against the euro, setting a 1-week low. The pound may face support around the 0.88 level, if it falls again.

In contrast, the pound rose to 167.18 against the yen, off its prior 2-day low of 165.95. On the upside, 169.00 is possibly seen as its next resistance level.

Looking ahead, at 10 am ET, the Bank of Canada will announce its interest rate decision. The BoC is widely expected to raise interest rate to 4.25 percent from 3.75 percent.