GBP/USD falls to new yearly lows at 1.3117, all eyes point to 1.3100

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  • The British pound extends its monthly losses, falling close to 2%.
  • A depressed market mood stimulated demand for safe-haven assets, where the dollar is “king”.
  • GBP/USD Technical Outlook: Break of 1.3100 would expose Nov 2, 2020 lows at 1.2853.

UK Prime Minister Boris Johnson made statements; and he said the UK “cannot just shut down the use of oil and gas overnight, even from Russia”.

The GBP/USD reacted by plummeting from 1.3170, the item’s original price, towards the 1.3115 area.

GBP/USD is down at the start of the week for the third consecutive trading day amid a mixed mood in financial markets. Around 1.3175, the British pound reflects the appetite for safe-haven pairs such as the US dollar, attributed to the escalation of the conflict between Russia and Ukraine and the possibility that the US weighs in banning oil imports from Russia.

Over the weekend, US Secretary of State Blinken said that the US and its allies are in active discussions about a Russian oil import ban, with subsequent reports stating that “the US is in a state of conflict. is considering acting without allies on a ban on Russian oil imports, although the timing and scope of any ban remains fluid,” according to Bloomverg.

Meanwhile, at the Asia Pacific open on Monday, oil futures reacted to the headlines as Brent crude oil climbed above $139 a barrel, while US crude oil rose to close to $139 a barrel. from $130. Additionally, gold broke above $2,000 for the first time since August 2020, while Asian stock indices ended lower. At press time, market sentiment shifted to risk aversion as European stock indices remained in the red while US stock indices opened lower.

In the FX space, the story is different. The dollar remains king, winning against most of the G8 currencies. The US Dollar Index (DXY) hit a new YTD high at 99.42, although it fell back to around 98.92, up 0.28% at the time of writing. Safe haven pairs like the CHF and JPY are taking a hit, shedding 0.94%-0.51%.

Other than this, upbeat US jobs numbers on Friday and advancing US Treasury yields supported the US dollar.

An absent economic docket from the UK and the US cut GBP/USD adrift due to pure market sentiment plays. In this context, GBP/USD would extend its decline due to its risk-sensitive nature.

GBP/USD Price Forecast: Technical Outlook

GBP/USD is biased to the downside and remains inside a descending channel, approaching its lower trend line around the 1.3080-1.3100 area. It is worth noting that the 50 day moving average (DMA) is about to cross below the 100 DMA, located at 1.3513/1.3477, respectively, which could exacerbate a further drop towards the September 2020 lows around 1.2675.

The first GBP/USD support would be on November 13, 2020, with lows at 1.3105. A break of the latter would expose 1.3000, followed by Nov 2, 2020 lows at 1.2853.

Technical levels

Source: Fx Street

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