GBP/USD crashes towards 1.1150, the lowest level since 1985

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  • GBP/USD comes under selling pressure again and falls to a new low since 1985.
  • The BoE’s 50 basis point rate hike on Thursday and recession fears weigh on sterling.
  • The dollar hits a new 20-year high and further contributes to the pair’s bearish move.

The pair GBP/USD continues its recent downtrend and weakens further below the 1.1200 level, reaching its lowest level since 1985 during the European session on Friday. The bearish trajectory increases after the publication of the preliminary UK PMIs and drags the pair towards the 1.1150 region.

The 50 basis point rate hike by the Bank of England on Thursday disappointed market participants who anticipated a more aggressive monetary policy. On the other hand, British Prime Minister Liz Truss’s energy relief package for homes and businesses could help curb inflation and has laid the groundwork for a dovish turn by the UK central bank. This turns out to be a key factor that continues to weigh on the British pound amid the risk of a looming recession.

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Market fears were fueled by the release disappointing from preliminary UK PMI data, which showed business activity in both the manufacturing and services sectors contracted in September. Elsewhere, the US dollar reaches a new two-decade high and remains well supported by the more aggressive stance taken by the Federal Reserve. This further contributes to the heavily offered tone surrounding the GBP/USD pair.

Meanwhile, the latest move lower could be attributed to some technical selling below the 1.1200 level. This could have set the stage for an extension of the bearish path, although the extreme oversold conditions on short-term charts warrant some caution for aggressive bears. Market participants are now waiting for the preliminary US PMI figures to gain some momentum ahead of Fed Chairman Jerome Powell’s speech.

GBP/USD technical levels

GBP/USD

Overview
last price today 1.1166
daily change today -0.0093
daily change today -0.83
Daily opening today 1.1259
Trends
daily SMA20 1.1519
daily SMA50 1.1828
daily SMA100 1,206
daily SMA200 1.2666
levels
Previous daily high 1.1364
Previous Daily Low 1.1212
Previous Weekly High 1.1738
Previous Weekly Low 1.1351
Previous Monthly High 1.2294
Previous Monthly Low 1.1599
Daily Fibonacci of 38.2%. 1,127
Daily Fibonacci of 61.8% 1.1306
Daily Pivot Point S1 1.1193
Daily Pivot Point S2 1.1126
Daily Pivot Point S3 1,104
Daily Pivot Point R1 1.1345
Daily Pivot Point R2 1.1431
Daily Pivot Point R3 1.1497

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Source: Fx Street

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