GBP/USD flirts with yearly low, around mid-1.3300s amid Brexit woes/stronger USD

GBP/USD remained under some selling pressure for the fourth consecutive day on Wednesday.
Brexit woes continued weighing on the GBP and dragged the pair lower amid a fresh USD buying.
Hawkish Fed acted as a tailwind for the USD, though retreating US bond yields capped the upside.
Investors now look forward to the US economic data/FOMC minutes for some meaningful impetus.

Haresh Menghani FXStreet

The GBP/USD pair edged lower through the first half of the European session and dropped to mid-1.3300s in the last hour, back closer to a yearly low set in the previous day.

A combination of factors failed to assist the GBP/USD pair to capitalize on the overnight bounce from the 1.3340 area, or the lowest level since December 2020, instead prompted fresh selling on Wednesday. The impasse over the post-Brexit arrangement in Northern Ireland and fishing rights continued acting as a headwind for the British pound. This, along with the emergence of fresh buying around the US dollar, dragged the pair lower for the fourth successive day.

The greenback shot to a fresh 16-month peak and remained well supported by growing acceptance for an early policy tightening by the Fed, reinforced by Jerome Powell's renomination as the Fed chair. Persistent concerns about rising inflationary pressures forced investors to price in the possibility for an eventual Fed rate hike move by July 2022. That said, retreating US Treasury bond yields could turn out to be the only factor capping gains for the USD.

Nevertheless, the GBP/USD pair, so far, has struggled to gain any meaningful traction, suggesting that an imminent Bank of England interest rate hike in December is fully priced in the markets. This, in turn, favours bearish traders and supports prospects for an extension of the recent decline from levels just above the key 1.3500 psychological mark. However, bearish traders are likely to wait for acceptance below mid-1.3300s before placing fresh bets.

Market participants now look forward to the US economic docket, highlighting the releases of the Prelim (second estimate) US Q3 GDP, Durable Goods Orders and Core PCE Price Index. This, along with the FOMC meeting minutes, will drive the USD demand and provide a fresh impetus to the GBP/USD pair. Apart from this, Brexit-related headlines should influence the GBP price dynamics and allow traders to grab some short-term opportunities.

Technical levels to watch

GBP/USD

Overview
Today last price	1.3364
Today Daily Change	-0.0016
Today Daily Change %	-0.12
Today daily open	1.338

Trends
Daily SMA20	1.3527
Daily SMA50	1.3614
Daily SMA100	1.371
Daily SMA200	1.383

Levels
Previous Daily High	1.341
Previous Daily Low	1.3343
Previous Weekly High	1.3514
Previous Weekly Low	1.3396
Previous Monthly High	1.3834
Previous Monthly Low	1.3434
Daily Fibonacci 38.2%	1.3368
Daily Fibonacci 61.8%	1.3384
Daily Pivot Point S1	1.3346
Daily Pivot Point S2	1.3311
Daily Pivot Point S3	1.3279
Daily Pivot Point R1	1.3412
Daily Pivot Point R2	1.3445
Daily Pivot Point R3	1.348

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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