- The pound remains under pressure in the market.
- The dollar remains firm although it falls against the franc and the euro.
- GBP/USD falls for the fifth day in a row, with no signs of change.
The GBP/USD is falling for the fifth day in a row. After bouncing back to the 1.2200 area, the pair resumed its downward run and dropped to 1.2063, marking a new low since March 2020.
The pair remains under pressure on Tuesday more as a result of the weakness of the pound than the strength of the dollar. The EUR/GBP is breaking a key resistance at the 0.8600 zone, which takes even more strength out of the pound. The dollar for its part remains firm against most of its rivals, although it falls against the euro and the franc, leading the DXY to have the first drop in five days.
In the UK the unemployment rate unexpectedly rose to 3.8% in April. On Thursday the Bank of England will announce the monetary policy decision, in a complicated context of fears for economic performance, but at the same time high inflation. Added to this are the renewed concerns about the Brexitsince British Conservative Party legislators have a plan to modify the agreement which would lead to new conflicts with the European Union.
In the US today the wholesale inflation data. On Wednesday the Federal Reserve will announce the monetary policy decision. A rise of 50 basic points is expected and it is not ruled out that it could be 75 points. This has given a boost to the dollar and the yields of Treasury bonds that today trade more calmly, after having the highest closing in years on Monday.
GBP/USD’s negative tone remains intact for now. Technical indicators mark oversold levels, but there are no signs of a rebound yet. If given, resistance can be seen at 1.2200 and then 1.2320. Down below 1.2050 the focus will shift to 1.2000.
Technical levels
Source: Fx Street
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