- GBP/USD comes under renewed selling pressure and drops to a fresh low since 1985.
- The BoE’s 50 bps rate hike on Thursday and recession fears weigh on the British pound.
- The USD hits a fresh 20-year peak and further contributes to the downward trajectory.
The GBP/USD pair prolongs its recent bearish trend and weakens further below the 1.1200 mark, hitting its lowest level since 1985 during the early European session on Friday. The downward trajectory picks up pace following the release of flash UK PMIs and drags spot prices to mid-1.1100s.
A 50 bps rate hike by the Bank of England on Thursday disappointed market participants anticipating a more aggressive policy tightening. Furthermore, UK Prime Minister Liz Truss' energy relief package for households and businesses could help slow inflation and has set the stage for a dovish pivot from the UK central bank. This turns out to be a key factor that continues to undermine the British pound amid the looming recession risk.
The market fears were further fueled by the disappointing release of the flash UK PMI prints, which showed that business activity in both manufacturing and services sectors contracted in September. The US dollar, on the other hand, hits a fresh two-decade high and remains well supported by a more hawkish stance adopted by the Federal Reserve. This further contributes to the heavily offered tone surrounding the GBP/USD pair.
Meanwhile, the latest leg down witnessed could further be attributed to some technical selling below the 1.1200 round-figure mark. This might have already set the stage for an extension of the downward trajectory, though extremely oversold conditions on short-term charts warrant some caution for aggressive bearish traders. Market participants now look forward to the US flash PMI prints for some impetus ahead of Fed Chair Jerome Powell’s speech.
Technical levels to watch
|Today last price||1.1166|
|Today Daily Change||-0.0093|
|Today Daily Change %||-0.83|
|Today daily open||1.1259|
|Previous Daily High||1.1364|
|Previous Daily Low||1.1212|
|Previous Weekly High||1.1738|
|Previous Weekly Low||1.1351|
|Previous Monthly High||1.2294|
|Previous Monthly Low||1.1599|
|Daily Fibonacci 38.2%||1.127|
|Daily Fibonacci 61.8%||1.1306|
|Daily Pivot Point S1||1.1193|
|Daily Pivot Point S2||1.1126|
|Daily Pivot Point S3||1.104|
|Daily Pivot Point R1||1.1345|
|Daily Pivot Point R2||1.1431|
|Daily Pivot Point R3||1.1497|
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 assets. 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 Open Markets 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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.