- The pound retreats further from the highs of 158.20, reaching levels below 156.00.
- The British pound rally loses steam as Bank of England tightening expectations fade.
- GBP / USD is now testing support at 156.00.
The GBP it has depreciated for the second day in a row on Friday, retreating further from multi-year highs at 158.20, to seek support at the 156.00 area. The pair is expected GBP/USD post a 0.6% weekly reversal, having risen 4.5% for the previous two weeks.
GBP Loses Momentum as Bank of England Bullish Expectations Fade
The pound’s rally has lost steam this week as the market shifted its focus to rising inflation and global supply constraints, with expectations of earlier-than-expected rate hikes from the Bank of England in second. flat. Investor hopes that consumer inflationary pressures would force the Bank of England to accelerate its monetary tightening plans have been driving sterling crosses higher across the board in recent weeks.
Beyond that, news reporting that the EU is considering ending the Brexit deal if the standoff with the UK over the Northern Ireland border continues, has added negative pressure on the British pound.
On the macro front, UK releases have been mixed on Friday. Manufacturing and services activity performed better than forecast in September, according to the Markit / CIPS purchasing manager indices, while retail consumption contracted more than expected, raising concerns about the impact of the crisis. supply in the economic growth of the country.
GBP / JPY: Test the 156.00 support
The pound reversal has extended to test support at 156.00 (April 21 high). Down here, bearish momentum could gain traction with potential next targets at 155.35 (intraday level) and 154.80 (38.2% Fibonacci retracement from October rally.
On the upside, a bullish reaction from current levels should extend beyond 156.60 / 70 (Oct 18-21 lows) and retest intraday highs at 157.60 before setting course towards 158.20 (Oct 19, 21 highs). October).
Technical levels
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