GBP/USD drops to its lowest level since June, further below 1.2600 on stronger USD

GBP/USD drifts lower for the fourth straight day and drops to a more than two-month low.
Bets for a lower BoE peak rate undermine the British Pound and exert pressure on the pair.
Technical selling below the 100-day SMA contributes to the downfall amid a bullish USD.

Haresh Menghani FXStreet

The GBP/USD pair prolongs its rejection slide from the 1.2800 mark touched earlier this week and remains under some selling pressure for the fourth successive day on Friday. Spot prices drop to a more than two-month low, around the 1.2585 region during the Asian session, confirming the overnight breakdown through a technically significant 100-day Simple Moving Average (SMA) for the first time since March 2023.

The British Pound (GBP) is undermined by rising bets for a lower Bank of England (BoE) peak rate, which, along with a bullish US Dollar (USD), continues to exert some downward pressure on the GBP/USD pair. The disappointing UK PMI prints released on Wednesday revived fears about an impending recession and convinced market participants that the BoE will not need to raise rates as high as previously thought to bring inflation back down to the target. In fact, money markets are now pricing in a small chance of any further rate hike after the anticipated 25 bps lift-off in September.

The USD, on the other hand, climbs to its highest level since June 7 and remains well supported by the overnight hawkish remarks by Federal Reserve (Fed) policymakers. In fact, Boston Fed President Susan Collins said that the central bank may be at a place to hold rates steady, though noted that more rate hikes are possible and that it is still premature to signal the timing of rate cuts. Adding to this, Philadelphia Fed President Patrick Harker stated that the central bank must keep its restrictive stance and added that inflation needs to fall further to pave the way for any rate cuts.

This, in turn, leaves the door open for one more 25 bps rate hike by the end of this year, which keeps the US Treasury bond yields elevated and continues to underpin the USD. Apart from this, some technical selling below the 100-day SMA contributes to the offered tone surrounding the GBP/USD pair and supports prospects for a further near-term depreciating move. Traders, however, might refrain from placing aggressive bets ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium, due later this Friday, and BoE Governor Andrew Bailey's statement on Saturday.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2589
Today Daily Change	-0.0012
Today Daily Change %	-0.10
Today daily open	1.2601

Trends
Daily SMA20	1.2734
Daily SMA50	1.2793
Daily SMA100	1.2638
Daily SMA200	1.2396

Levels
Previous Daily High	1.2729
Previous Daily Low	1.2592
Previous Weekly High	1.2788
Previous Weekly Low	1.2617
Previous Monthly High	1.3142
Previous Monthly Low	1.2659
Daily Fibonacci 38.2%	1.2644
Daily Fibonacci 61.8%	1.2676
Daily Pivot Point S1	1.2552
Daily Pivot Point S2	1.2503
Daily Pivot Point S3	1.2415
Daily Pivot Point R1	1.2689
Daily Pivot Point R2	1.2778
Daily Pivot Point R3	1.2827

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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