GBP/USD drops below 1.2000, heads for lowest weekly close in three months
- US Dollar extends gains during Friday’s American session.
- Economic data continues to support more rate hikes from the Fed.
- GBP/USD tests levels under critical support area of 1.1940.
The GBP/USD dropped further on Friday following the release of US economic data and bottomed at 1.1927, the lowest level in a week, and slightly above the monthly low.
The pound is consolidating weekly losses amid a stronger US Dollar and higher US yields. US activity and inflation figures above consensus favoured expectations of higher for longer interest rates. As a consequence, the 2-year Treasury yield jumped to the highest since November at 4.79% and the 10-year moved toward 4%.
The dollar on Friday accelerated to the upside also boosted by a deterioration in market sentiment. The GBP/USD broke decisively below 1.2000. It is hovering around 1.1940/50, down almost a hundred pips for the level it had a week ago.
The weekly chart shows the price testing the 20-week moving average, after being unable to recover above the 20-day moving average at 1.2120. It is falling for the third consecutive day.
“Should the pair yield a daily closing below the critical support around the 1.1940 level, where the 100 and 200 DMAs (Daily Moving Averages) converge, a sharp sell-off toward the 1.1900 round figure will be in the offing. Further south, the 2023 low of 1.1841 will be next on sellers' radars”, writes Dhawni Mehta, Analyst at FXStreet. According to Mehta, the GBP/USD needs acceptance above the 1.2150 static resistance and the 50-day DMA to initiate a fresh recovery toward 1.2200.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
