- GBP/USD plunges to 18-month lows around 1.2828.
- Weaker-than-expected economic data from the UK and market sentiment were the drivers of the pound’s decline.
- GBP/USD Price Forecast: Drop to 1.2675 if a daily close below 1.2854 is achieved.
British pound slumps and breaks below 1.3000 and 1.2900 and hits a fresh 18-month low around 1.2828, amid a gloomy market mood and continued central bank speech at an IMF event in Washington . In 1.2831, the GBP/USD it weakened further since November 2020.
Global equities are suffering a bloodbath on the day. Global bond yields are rising as the dollar remains buoyant and hits a new yearly high around 101.33, up 0.61% on the day, as central bankers and finance ministers speak at an IMF panel.
UK economic data and market sentiment weighed on GBP/USD
GBP/USD fell on market sentiment and worse-than-expected UK economic data. Gfk consumer sentiment hit its worst level since 2008. UK retail sales were weaker than forecast and S&P global PMIs for April beat expectations, but services and composite lagged the numbers of the previous month.
On the other hand, the Governor of the Bank of England (BoE), Andrew Bailey, said that inflation would rise in the United Kingdom thanks to energy prices. Additionally, Bailey added that the BoE would only actively sell QT in stable markets and cease if conditions change.
Meanwhile, on Thursday, Fed Chairman Powell joined the Fed’s hawks, saying a 50 bps hike “is on the table for the May meeting,” while emphasizing that it favors ” initial charge” of your tuning cycle. Also, St. Louis Fed President James Bullard admitted that the Fed is behind the curve, but not like everyone thinks, adding that the Fed has gone up 75 bps before without the world coming to an end.
Meanwhile, the US economic docket featured the S&P Global Flash US Manufacturing PMI for April, which rose by 59.7, beating March’s figures. Regarding the Services and Composite component, both readings were lower than the previous month’s reading.
GBP/USD Price Forecast: Technical Outlook
GBP/USD has fallen of late, down from previous yearly high at 1.2972 and trading below Nov 2020 lows at 1.2853, as the Relative Strength Index (RSI) heads aggressively into bearish territory at 31.34 after the GBP/USD fell 200 pips.
Despite the above, GBP/USD has enough room for further losses, and a daily close below the November 2020 lows would open the door for a test of the September 2020 lows.
That said, the first GBP/USD support would be 1.2800. A break of the latter would expose the 28 Sep 2020 lows at 1.2751, followed by 1.2700, and then the 23 Sep 2020 low at 1.2675.
Technical levels
Source: Fx Street
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