GBP/USD plummets to three-week low, eyes 1.2400 amid broad-based USD strength

GBP/USD drifts lower for the second straight day and dives to a three-week low on Wednesday.
Speculations for fewer BoE rate hikes undermine the GBP and weigh amid sustained USD buying.
The fundamental/technical setup supports prospects for an extension of the downward trajectory.

Haresh Menghani FXStreet

The GBP/USD pair adds to the previous day's losses and remains under heavy selling pressure for the second successive day on Wednesday. The downward trajectory remains uninterrupted through the first half of the European session and drags spot prices to a three-week low, around the 1.2420 region in the last hour.

The British Pound continues to be undermined by rather unimpressive UK monthly jobs data released on Tuesday, which fueled speculations that fewer rate increases by the Bank of England (BoE) will be needed in the coming months to bring down inflation. This, along with some follow-through US Dollar (USD) buying, aggravates the bearish pressure surrounding the GBP/USD pair and contributes to the steep intraday decline.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, jumps to a nearly two-month high and draws support from a combination of factors. The overnight hawkish comments by Cleveland Federal Reserve (Fed) President Loretta Mester reaffirmed expectations that the US central bank will keep interest rates higher for longer. Apart from this, worries about a global economic slowdown benefits the safe-haven buck.

The softer Chinese macro data released on Tuesday pointed to a wobbly post-COVID recovery in the world's second-largest economy and fueled recession fears. This comes on the back of a standoff to raise the federal government's borrowing limit and drives some haven flows towards the Greenback. That said, a modest bounce in the US equity futures, along with a downtick in the US Treasury bond yields, might cap the USD.

Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the GBP/USD pair is to the downside. Even from a technical perspective, last week's breakdown through the lower end of over a one-month-old ascending trend channel favours bearish traders and supports prospects for a further near-term depreciating move towards the next relevant support near the 1.2375-1.2370 region.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2428
Today Daily Change	-0.0061
Today Daily Change %	-0.49
Today daily open	1.2489

Trends
Daily SMA20	1.2516
Daily SMA50	1.238
Daily SMA100	1.2258
Daily SMA200	1.1965

Levels
Previous Daily High	1.2547
Previous Daily Low	1.2465
Previous Weekly High	1.268
Previous Weekly Low	1.244
Previous Monthly High	1.2584
Previous Monthly Low	1.2275
Daily Fibonacci 38.2%	1.2496
Daily Fibonacci 61.8%	1.2516
Daily Pivot Point S1	1.2454
Daily Pivot Point S2	1.2419
Daily Pivot Point S3	1.2373
Daily Pivot Point R1	1.2535
Daily Pivot Point R2	1.2582
Daily Pivot Point R3	1.2617

Author

Haresh Menghani

FXStreet

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

GBP/USD declines as market caution lifts US Dollar

GBP/USD extends its gains for the second successive day, trading around 1.3200 during the Asian hours on Wednesday. The currency pair depreciated as the US Dollar gained momentum, driven by a combination of robust domestic economic data and a complex, mixed geopolitical landscape.

EUR/USD hits one-year low, eyes 1.1350 as bullish USD offsets oversold RSI

The EUR/USD pair drifts lower for the third straight day – also marking the fifth day of a negative move in the previous six – and drops to over a one-year low during the Asian session on Wednesday. Spot prices currently trade around the 1.1365 area, down nearly 0.15% for the day, and seem vulnerable to slide further amid a bullish US Dollar.

$4,050: Gold dives to fresh two-week low as Fed rate hike bets boost US Dollar

Gold drifts lower for the second straight day – also marking the fifth day of a negative move in the previous six – and drops to a nearly two-week low during the Asian session on Wednesday. Despite easing inflationary concerns in the face of the recent fall in Crude Oil prices, traders have been pricing in a greater chance of a rate hike by the US Federal Reserve.

Bitcoin under pressure, Ethereum loses key support, XRP momentum weakens

Bitcoin, Ethereum and Ripple remain under pressure on Wednesday after falling slightly the previous day. BTC trades below $63,000, ETH slips below $1,700, while XRP momentum continues to weaken. The deteriorating price action in these top three cryptocurrencies suggests a potential continuation of the near-term correction.

"Rearranging the deckchairs on the Titanic": UK's fiscal crisis outlasts another Prime Minister

Keir Starmer's resignation as the UK Prime Minister comes ten years after the Brexit referendum vote, a coincidence that financial markets have been quick to note. The British Pound trades around 1.3220 against the US Dollar on Thursday.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.