- GBP/USD has taken a sigh of relief after a nosedive move near 1.1825, more downside looks inevitable.
- Fed Powell’s extremely hawkish remarks on interest rate guidance have spooked market sentiment.
- A breakdown of crucial support after a Double Top formation has confirmed a bearish reversal.
The GBP/USD pair has turned sideways around 1.1825 in the early Asian session after a nosedive move from the psychological resistance of 1.2000. The downside bias in the Cable looks not over yet as the currencies have to bear the volatility associated with the US Automatic Data Processing (ADP) Employment Change (Feb) after sheer volatility inspired by the commentary from Federal Reserve (Fed) chair Jerome Powell.
S&P500 futures were heavily dumped by investors as more rates from the Federal Reserve (Fed) have made the US economy prone to recession. A dismal US economic outlook sent the US Dollar Index (DXY) to a fresh three-month high at 105.65. The return delivered on 10-year US Treasury bonds is around 3.97%.
The remarks from Fed Powell in his testimony before Congress forced investors to underpin the risk aversion theme. Powell said the “ultimate level of interest rates is likely to be higher than previously anticipated,” after the “latest economic data have come in stronger than expected.”
GBP/USD has delivered a breakdown of the Double Top chart pattern formed on a daily scale plotted from December 15 high at 1.2447. A slippage below the horizontal support placed from January 06 low at 1.1841 confirms a bearish reversal.
The 50-period Exponential Moving Average (EMA) at 1.2064 is acting as a major barricade for the Pound Sterling.
Meanwhile, the Relative Strength Index (RSI) (14) has slipped below 40.00 for the first time in the past one month. More downside looks inevitable as the RSI (14) is not showing any sign of divergence and oversold.
Should the Cable break below the round-level support of 1.1800, US Dollar bulls will drag the asset further toward November 17 low at 1.17633 followed by November 14 low around 1.1700.
On the flip side, a move above February 24 high at 1.2040 will drive the asset toward February 23 high around 1.2080. A breach of the latter will expose the asset to February 21 high around 1.2140.
GBP/USD daily chart
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
EUR/USD extends decline toward 1.0500 after US data
EUR/USD came under renewed bearish pressure and declined toward 1.0500 in the second half of the day on Monday. After the data from the US showed that the ISM Manufacturing PMI came in better than expected in September, the US Dollar extended its rally and weighed on the pair.
GBP/USD falls below 1.2150 as USD rally continues
GBP/USD turned south and retreated to a fresh daily low below 1.2150 in the American session. The US Dollar continued to gather strength against its rivals after the better-than-expected ISM September Manufacturing PMI data and forced the pair to stay on the back foot.
Gold falls to fresh multi-month lows below $1,830
Gold price turned south and dropped to its weakest level since early March below $1,830. The benchmark 10-year US Treasury bond yield gained traction on upbeat US PMI data and was last seen rising nearly 2% on the day above 4.6%, causing XAU/USD to stretch lower.
Week ahead: Fed speech and NFP likely to dictate crypto market moves this week
With the start of 2023’s fourth quarter, things are finally getting interesting in crypto. While the next 12 weeks are extremely important, let’s start by focusing on what to expect this week.
NIO contracts 2% as Tesla delivery decline weighs on EV sector
Nio (NIO) stock dropped 2.3% on Monday morning despite meeting its quarterly delivery target for the third quarter. Tesla's (TSLA) Q3 production and delivery decline is the culprit.