GBP/USD hits multi-week lows near 1.2420

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  • GBP/USD hit multi-week lows on Friday at the 1.2400 area, and the bears are attempting to move down to the 1.2300 area.
  • In the short term, the focus is on the upcoming US CPI release and whether it will affect Fed tightening expectations.

The GBP/USD reached new multi-week lows in the 1.2420 area on Friday, amid mixed currency market conditions and some risk aversion ahead of the release of US inflation data. The pair last traded down roughly 0.5% on the day, with bears eyeing a push lower to 1.2350 next week if fears of a weakening UK economy persist.

According to a REC survey cited by Reuters on Friday, British employers hired staff at the slowest pace since the start of 2021 in May, and the pace of hiring has slowed for the sixth consecutive month. Sterling also has domestic politics to worry about, as the UK Government has reiterated its intention to pass legislation unilaterally amending the Northern Ireland Protocol (thus jeopardizing the UK’s free trade agreement with the EU) and the authority of British Prime Minister Boris Johnson has been undermined by Monday’s no-confidence vote, which saw a larger-than-expected rebellion from his own MPs.

In the short term, attention will turn to US consumer price inflation data due at 12:30 GMT, and analysts believe the data could ease concerns about inflation, it could (on the sidelines) alleviate some of the pressure the Fed is feeling to tighten monetary policy so quickly in the coming quarters. This could provide GBP/USD with some short-term support. However, given the divergence between the Fed and Council of Europe policies and the comparative weakness in UK growth, traders might be inclined to sell any rally in sterling.

Technical levels

GBP/USD

Panorama
Last Price Today 1.2438
Today’s Daily Change -0.0056
Today’s Daily Change % -0.45
Today’s Daily Opening 1.2494
Trends
20 Daily SMA 1.2512
50 Daily SMA 1.2666
100 Daily SMA 1.3011
200 Daily SMA 1.3279
levels
Previous Daily High 1.2558
Previous Daily Minimum 1.2487
Previous Maximum Weekly 1,266
Previous Weekly Minimum 1.2458
Monthly Prior Maximum 1.2667
Previous Monthly Minimum 1.2155
Daily Fibonacci 38.2% 1.2514
Daily Fibonacci 61.8% 1.2531
Daily Pivot Point S1 1.2468
Daily Pivot Point S2 1.2442
Daily Pivot Point S3 1.2397
Daily Pivot Point R1 1.2539
Daily Pivot Point R2 1.2584
Daily Pivot Point R3 1,261

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Source: Fx Street

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