GBP/USD plummets to mid-1.1100s, lowest since 1985 amid relentless USD buying

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.

Haresh Menghani FXStreet

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

GBP/USD

Overview
Today last price	1.1166
Today Daily Change	-0.0093
Today Daily Change %	-0.83
Today daily open	1.1259

Trends
Daily SMA20	1.1519
Daily SMA50	1.1828
Daily SMA100	1.206
Daily SMA200	1.2666

Levels
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

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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