• GBP/USD witnesses heavy selling for the third successive day and drops to a one-month low.
  • Hawkish Fed expectations, recession fears underpin the USD and exert downward pressure.
  • The fundamental backdrop favours bearish traders and supports prospects for further losses.

The GBP/USD pair prolongs a one-and-half-week-old bearish trend and continues losing ground for the third successive day on Friday. This also marks the sixth day of a negative move in the previous seven and drags spot prices below the 1.1900 mark, or a one-month low during the first half of the European session.

US dollar buying remains unabated on the last day of the week and turns out to be a key factor that continues to exert downward pressure on the GBP/USD pair. In fact, the USD Index (DXY), which tracks the greenback against a basket of half a dozen major currencies has shot to its highest level since July 18 and remains well supported by hawkish Fed expectations.

The recent comments by several Fed officials suggest that the US central bank will stick to its policy tightening path to tame inflation. The prospects for a further rate increases by the Fed have pushed the yield on the benchmark 10-year US government bond back closer to the 3.0% threshold. This, along with the prevalent risk-off mood, underpins the safe-haven buck.

The British pound, on the other hand, struggles to find buyers despite better-than-expected UK Retail Sales, which recorded the first increase in three months and rose 0.3% in July. The Bank of England's bleak outlook, warning that a prolonged recession would start in the fourth quarter, continues to weigh on sterling and contributes to the GBP/USD pair's decline.

From a technical perspective, acceptance below the 1.1900 mark could be seen as a fresh trigger for bears and supports prospects for a further near-term depreciating move for the GBP/USD pair. Hence, a subsequent fall towards the next relevant support, around the 1.1820 region, remains a distinct possibility amid absent relevant economic data from the US.

Technical levels to watch

GBP/USD

Overview
Today last price 1.1896
Today Daily Change -0.0033
Today Daily Change % -0.28
Today daily open 1.1929
 
Trends
Daily SMA20 1.2111
Daily SMA50 1.2098
Daily SMA100 1.2382
Daily SMA200 1.2884
 
Levels
Previous Daily High 1.208
Previous Daily Low 1.1923
Previous Weekly High 1.2277
Previous Weekly Low 1.2048
Previous Monthly High 1.2246
Previous Monthly Low 1.176
Daily Fibonacci 38.2% 1.1983
Daily Fibonacci 61.8% 1.202
Daily Pivot Point S1 1.1875
Daily Pivot Point S2 1.182
Daily Pivot Point S3 1.1718
Daily Pivot Point R1 1.2032
Daily Pivot Point R2 1.2134
Daily Pivot Point R3 1.2188

 

 

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