- GBP/USD is at two-year lows, with a break below 1.1700 inevitable.
- The US dollar cheers Powell’s comments-led risk-off sentiment.
- Bear flag confirmation on the 1D chart opens more downside for cable.
GBP/USD is closing in on 1.1700, extending Friday’s decline amid an extension of risk-off sentiment and the US dollar recovery. Asian traders react negatively to Fed Chair Jerome Powell’s Jackson Hole remarks, as reflective of the 0.80% drop in the US S&P 500 futures in opening trades.
Expectations of higher rates for longer have ramped up after Powell’s comments, stoking growth fears and boding ill for global stocks. Investors continue to seek refuge in the safe-haven US dollar at the expense of high-beta currencies such as the British pound.
Meanwhile, the UK currency battles a dire economic outlook amid surging energy costs, which accentuates the country’s cost-of-living crisis. Looking ahead, the moves in the major could be exaggerated amid low volumes and minimal volatility, as the British traders are away, observing the Summer Bank holiday on Monday.
Amidst a lack of top-tier US economic data, traders will await Fed official Lael Brainard’s speech for fresh trading impetus.
As observed on cable’s daily chart, the downside break below the rising trendline support at 1.1777 on Friday has confirmed a bearish flag.
The downtrend could now extend towards the 1.1650 psychological level. Ahead of that the 1.1705 demand area will challenge the bullish commitments. That zone is the confluence of the two-year lows and the falling (dashed) trendline.
Also read: GBP/USD Weekly Forecast: Braces for more pain in the NFP week ahead
The 14-day Relative Strength Index (RSI) inches lower while sitting just above the oversold region, suggesting that there is more room for a downside move. Adding credence to the bearish potential, the 21 and 50-Daily Moving Averages (DMA) bearish crossover confirmed earlier this week also remains in play.
Alternatively, bulls need a sustained move above the rising trendline resistance at 1.1879 to negate the near-term bearish bias. The next significant upside target is aligned at 1.1900 the round figure. The August 19 high at 1.1937 will be next on buyers' radars.
GBP/USD: Daily chart
-637973234282558442.png)
GBP/USD: Additional technical levels
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.
Recommended content
Editors’ Picks
AUD/USD favours extra retracements in the short term
AUD/USD kept the negative stance well in place and briefly broke below the key 0.6400 support to clinch a new low for the year on the back of the strong dollar and mixed results from the Chinese docket.
EUR/USD now shifts its attention to 1.0500
The ongoing upward momentum of the Greenback prompted EUR/USD to lose more ground, hitting new lows for 2024 around 1.0600, driven by the significant divergence in monetary policy between the Fed and the ECB.
Gold aiming to re-conquer the $2,400 level
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
Bitcoin price defends $60K as whales hold onto their BTC despite market dip
Bitcoin (BTC) price still has traders and investors at the edge of their seats as it slides further away from its all-time high (ATH) of $73,777. Some call it a shakeout meant to dispel the weak hands, while others see it as a buying opportunity.
Friday's Silver selloff may have actually been great news for silver bulls!
Silver endured a significant selloff last Friday. Was this another step forward in the bull market? This may seem counterintuitive, but GoldMoney founder James Turk thinks it was a positive sign for silver bulls.