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GBP/USD falls to fresh daily low, looks vulnerable near 1.1950

  • GBP/USD finds fresh selling on Monday amid broad-based USD strength.
  • Expectations for an aggressive rate hike from the Fed push the dollar back toward two-decade highs.
  • Domestic issues continue to weigh on the GBP and added to the selling bias in the pair.

The pair GBP/USD struggled to capitalize on last week’s modest recovery move, from its lowest level since March 2020, and found new sales around the 1.2035 area on Monday. The pair extended its steady intraday decline at the start of the European session and fell to a new daily low, around the region of 1.1960-1.1955 in the last hour.

The US dollar regained strong positive traction on the first day of a new week and moved back close to two-decade highs hit on Friday. amid Fed expectations. On the other hand, recent political turmoil in the UK and Brexit woes continued to weigh on sterling. This, in turn, put some downward pressure on the GBP/USD pair.

The markets seem to be convinced that the US central bank will maintain its aggressive policy of tightening to curb persistently high inflation. In fact, the FOMC minutes released last Wednesday indicated that another rate hike of 50 or 75 basis points is likely at the July meeting. Additionally, monthly US employment figures reaffirmed expectations for a faster rate hike from the Fed.

On the contrary, Bank of England expected to take gradual approach towards raising interest rates amid growing fears of a recession. Investors also continue concerned that the British government’s controversial Northern Ireland Protocol Bill could trigger a trade war with the European Union. This should continue to act as a sterling headwind and favors GBP/USD bears.

Therefore, a further decline towards the 1.1900 round level, on the way to the lows around the 1.1875 region hit last week, remains a distinct possibility. In the absence of major economic releases from both the UK and the US, dollar price dynamics will play a key role in influencing the GBP/USD pair and producing short-term trading opportunities.

However, market attention will continue to be focused on the release of the latest US CPI consumer inflation figures due on Wednesday. Also released on this week’s US economic calendar will be monthly retail sales data and preliminary consumer sentiment from Michigan on Friday. These data will boost the demand for the dollar and give a new directional boost to the GBP/USD pair.

GBP/USD technical levels

GBP/USD

Overview
last price today 1.1958
daily change today -0.0073
daily change today -0.61
Daily opening today 1.2031
Trends
daily SMA20 1.2156
daily SMA50 1.2343
daily SMA100 1.2725
daily SMA200 1.3116
levels
Previous daily high 1.2056
Previous Daily Low 1,192
Previous Weekly High 1.2165
Previous Weekly Low 1.1876
Previous Monthly High 1.2617
Previous Monthly Low 1.1934
Daily Fibonacci of 38.2% 1.2004
Fibonacci 61.8% daily 1.1972
Daily Pivot Point S1 1.1949
Daily Pivot Point S2 1.1866
Daily Pivot Point S3 1.1812
Daily Pivot Point R1 1.2085
Daily Pivot Point R2 1.2138
Daily Pivot Point R3 1.2221

Source: Fx Street

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