- GBP/USD is down for the third day in a row and falls to a nearly two-week low.
- Expectations around the Fed and cautious sentiment benefit the safe-haven USD.
- The fall seems supported, while the focus of attention continues to be on the president of the Fed and the president of the Bank of England.
The pair GBP/USD extends decline this week from the 1.2330-1.2335 zone and falls for the third day in a row on Wednesday. The bearish movement has taken the pair to a low of almost two weeks, about 1.2150 during the early part of the European session, although it lacks continuation selling.
Market sentiment remains fragile amid the concern that a more aggressive move by major central banks to curb rising inflation will challenge economic growth world. This helped the US dollar extend the previous day’s strong rally and gain some continuation traction, which in turn put some downward pressure on the GBP/USD pair.
The pound sterling was further hurt by the Brexit woes and expectations that the Bank of England will opt for a more gradual approach to raising interest rates. The UK House of Commons on Monday voted in favor of a controversial bill that would unilaterally nullify part of Britain’s divorce deal with the EU agreed in 2020.
This last event increased the risk of new tensions with the EU amid the UK cost of living crisis and growing recession fears. This could continue to weigh on the British pound and supports the prospects for a further short-term move lower in GBP/USD. That said, the pullback in US bond yields could cap the dollar, at least for now.
Investors could also refrain from taking aggressive positions and prefer to wait on the sidelines before the key event. The chairman of the Fed, Jerome Powelland the governor of the ECB, Andrew Bailey, will speak at the ECB forum in Sintra. Investors will look for clues on the path of central banks’ monetary policy tightening before determining the next directional move for the GBP/USD pair.
GBP/USD technical levels
|last price today||1.2182|
|daily change today||-0.0001|
|Today’s daily variation||-0.01|
|Daily opening today||1.2183|
|Previous daily high||1.2292|
|Previous Daily Low||1.2181|
|Previous Weekly High||1.2324|
|Previous Weekly Low||1.2161|
|Previous Monthly High||1.2667|
|Previous Monthly Low||1.2155|
|Daily Fibonacci of 38.2%.||1.2223|
|Daily Fibonacci of 61.8%||1.2249|
|Daily Pivot Point S1||1.2145|
|Daily Pivot Point S2||1.2107|
|Daily Pivot Point S3||1.2034|
|Daily Pivot Point R1||1.2257|
|Daily Pivot Point R2||1,233|
|Daily Pivot Point R3||1.2368|
Source: Fx Street