- GBP / USD continued to lose ground on Friday and fell to month-long lows in the last hour.
- Sustained buying in the USD and disappointing UK macro data bot contributed to the ongoing slide.
- A drop below the July lows will set the stage for an extension of the depreciation movement.
The pair GBP/USD it added to the heavy losses of the previous day and witnessed some subsequent sales on the last day of the week. This marked the fourth day of a negative move in the previous five and dragged the pair to the 1.3600 area, or month-long lows for the middle of the European session.
Risk aversion coupled with expectations that the Fed will begin rolling back its pandemic-era stimulus pushed the safe-haven U.S. dollar to a nine-and-a-half-month high on Friday. Aside from this, the disappointing release of UK monthly retail sales figures weighed on the British pound and contributed to the continued decline of the GBP / USD pair.
From a technical perspective, the overnight slide confirmed a double top break through the neckline support near the 1.3725 area. The subsequent weakness below 1.3700 validated the bearish setup and contributed to the ongoing decline. However, the oversold RSI on the hourly charts prevented traders from placing further bearish bets, at least for the time being.
Nonetheless, the bias remains firmly skewed in favor of bearish traders and supports the prospects for a decline towards July’s monthly swing lows around the 1.3570 region. This is followed by support near 1.3550, below which the downward trajectory could extend further and drag GBP / USD towards the challenge of the psychological level 1.3500.
On the other hand, any attempted recovery above the 1.3640-50 region could now face stiff resistance before 1.3700. A sustained strength beyond could spark some short covering move towards the 1.3680-90 area. Momentum could still be seen as a selling opportunity and risks fading quickly, rather than remaining limited near the 1.3725 support breakout point.
Daily chart GBP / USD
Technical levels
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
