GBP / USD retests yearly lows, around 1.3450

• GBP / USD remained under intense selling pressure for the second day in a row.
• A combination of factors continued to push the USD higher and put pressure on it.
• A break below 1.3500 further contributed to the sharp intraday decline.

The pair GBP/USD it continued to lose ground during the early days of the American session and again fell closer to the annual lows, around 1.3450 touched in January.

The pair added to the heavy losses of the previous day and remained under intense selling pressure for the second day in a row. This also marked the third day of a negative move in the previous four and was sponsored by a relentless rally in the US dollar. In fact, the key USD index spiked to nearly 11-month highs around 94.00 and remained well supported by a combination of factors.

The intensification of the energy crisis in China resurfaced fears of a global economic slowdown and benefited the dollar’s status as a world reserve currency. Added to this, the prospects for an early tightening of policy by the Fed acted as a tailwind for the dollar. This, to a greater extent, helped offset the looming US debt ceiling and falling US Treasury yields.

On the other hand, the British pound was undermined by the growing signs of the fuel crisis in the UK due to the post-Brexit shortage of truck drivers. Britain has been in the grip of a flurry of panic buying for nearly a week after oil companies warned they didn’t have enough tanker truck drivers to transport gasoline and diesel from refineries to filling stations.

Apart from this, the technical selling below the key psychological level of 1.3500 further exacerbated the downward pressure around the GBP / USD pair. That said, the extremely oversold RSI on the hourly charts could prevent traders from placing new bearish bets. The focus now shifts to statements by Fed Chairman Jerome Powell and Bank of England Governor Andrew Bailey at an ECB forum in Sintra.

Technical levels