Alexander Kuptsikevich
FxPro Financial Services Limited
The British Pound lost ground against the Dollar for the fifth consecutive session, falling below the 1.2200 level. GBPUSD is down 4% since the beginning of the month, when pressure on the Pound intensified, and 7.3% from July's peak.
Fundamentally, the latest phase of the Pound's sell-off is due to the Bank of England's softer-than-expected response to the latest inflation report. The technical reason is the break below the 200-day moving average, which has prompted some key market participants to revise their long-term outlook.
The last time the GBPUSD was this oversold on the RSI was about a year ago. This indicator has fallen as low as 20% on a daily timeframe. Last year, it was only lower for three days at the end of September, followed by an impressive reversal.
However, the situation is not directly comparable. Then, there was a real exodus from the Pound, with a fall to historic lows of just over 1.03. The current decline is similar to what we saw in May 2018 or October 2016. GBPUSD then temporarily recovered 40-50% of the initial losses before resuming the downward movement.
From current levels, a corrective bounce in the Pound could take the pair back to 1.2320, an area of previous support with a high probability of becoming resistant. A more ambitious target for the bulls is 1.2430, with a 200-day moving average and two downward reversals, in December and in January.
Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts' opinions are for informational purposes only and should not be considered as a recommendation or trading advice.
Recommended Content
Editors’ Picks
EUR/USD rebounds from multi-week lows, trades above 1.0750
EUR/USD came under heavy bearish pressure and declined to its weakest level in three weeks below 1.0750 on Friday after the stronger-than-expected Nonfarm Payrolls data. Week-end flows, however, helped the pair erase its daily losses.
GBP/USD remains on track to snap three-week winning streak
GBP/USD recovered toward 1.2550 after coming in within a touching distance of 1.2500 in the second half of the day after Nonfarm Payrolls came in at 199,000 for November. Despite the recent rebound, the pair remains on track to snap a three-week winning streak.
Gold retreats below $2,020 as US yields push higher
Gold broke below its daily range and declined toward $2,010 with the immediate reaction to the upbeat US November jobs report. Although XAU/USD managed to recover toward $2,020, rising US Treasury bond yields triggered another leg lower.
Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000
Bitcoin price just like other assets, is highly impacted by the macro-financial developments. This includes the Nonfarm Payrolls (NFP) report released by the BLS of the United States.
The week ahead – Fed, ECB and Bank of England rate decisions
When the Federal Reserve kept rates unchanged back in November for the second meeting in a row there was still the distinct possibility that the final meeting of 2023 would provide the possibility of one more rate rise to round off the year in line with Fed policymakers dot plot forecasts of 5.6%.