GBP/USD approaches post-election lows below mid-1.26s

After struggling to extend its recovery above the 1.27 handle, the GBP/USD came under a renewed selling pressure in the NA session and pushed lower toward its two-month low that was set a couple of days after the U.K. election at 1.2638. As of writing, the pair is trading at 1.2653, down 0.7% on the day.

Earlier in the European session, in his Mansion House speech, the Bank of England Governor Mark Carney argued that it wasn't yet the time for a rate adjustment amid mixed signals on consumer spending and business investment and added that Brexit would be a big test for the economy. Following Carney's comments, the cable sell-off weighed on the GBP/USD pair and pushed the EUR/GBP pair higher. 

On the other hand, the greenback continues to be supported by the hawkish comments from FOMC members. In the early trading hours of the NA session, Boston Fed President Eric Rosengren said that low rates would make it tougher for the Fed to fight off future recessions. After reaching its session top at 97.34, the US Dollar Index is now at 97.28, up 0.05% on the day. Later in the session, Dallas Fed President Kaplan, who on Friday said that he needs to see more evidence of inflation recovering before making another policy move toward normalization, will cross the wires. A hawkish shift in his tone could provide an additional boost to the greenback.

Technical outlook

At the moment, the pair is testing the 100-DMA support at 1.2650. A decisive break below this level could open the door to 1.2580 (Fib. 50% retracement of mid-March - mid-May rise) and 1.2480 (Fib. 61.8%). However, the RSI on the daily graph is inching closer to the oversold area, suggesting that a technical correction could be seen before the pair extends its bearish move. On the upside, the former support at 1.2690 (Fib. 38.2%) now aligns as the first technical resistance ahead of 1.2800 (psychological level/20-DMA) and 1.2870 (50-DMA).


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.