GBP/USD Hits New 21-Month Lows Near 1.2600 as US Dollar Soars

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  • US dollar accelerates higher, DXY hits new 2-year highs above 102.00.
  • Risk aversion weighs on the pound, the Nasdaq falls 3%.
  • GBP/USD at the lowest level since July 2020, watch the 1.2600 level.

After a short-lived recovery, the pair GBP/USD resumed its downtrend, breaking below 1.2670. He bottomed out at 1.2616, hitting the lowest level since July 2020.

Libra among the worst

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The pound is under pressure amid risk aversion. EUR/GBP is trading at 0.8440, the highest level in three weeks, GBP/JPY bottomed at 160.40 (down almost 300 pips on the day), and AUD/GBP is down a hundred pips, reversing sharply from the high monthly which reached on Monday at 1.7885.

On Wall Street, the Dow Jones falls 1.46% and the Nasdaq plunges 3.10%. In Europe, the main stock indices are down 0.75%. Investors await earnings reports from Microsoft and Alphabet.

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The dollar, as measured by the US Dollar Index, is trading 0.41% gain at 102.15, the highest level since March 2020. At the same time, US yields are at weekly lows as it rises demand for Treasuries due to deteriorating market sentiment. The 10-year US bond bottomed out at 2.72% and the 30-year yield at 2.83%.

Oversold, but who cares?

The GBP/USD pair falls for the fourth consecutive day, accumulating a drop of more than 400 pips. Technical indicators are in oversold territory, but no signs of consolidation or correction are in sight.

The pound’s negative momentum remains intact. The next resistance could be seen around 1.2600, followed by 1.2580. On the upside, resistance levels are seen at 1.2665, followed by 1.2700 and 1.2770.

Technical levels

Source: Fx Street

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