(MENAFN- Daily Forex) The bears' control over the future of the gbp/usd exchange rate continues . It is confirmed near the psychological support 1.2000. The downward path will not stop, especially if the US Federal Reserve signals for tightening are stronger. The US job numbers this week are also confirmed to the Federal Reserve policy.
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Fluctuations in government borrowing costs have tilted the“yield curve”. The shift between flat and sharp formations in trade and year-end price action suggesting that investors may think the latest Bank of England (BoE) outlook is too bleak in their outlook for the British economy.
British government bond yields rose in volatile year-end trading on Friday, and at times, the 02-, 10- and 30-year yield levels reversed an upward yield curve that can only be seen in market conditions in which investors are present. It has a positive outlook for the UK economy. For example, during the European trade in London, the 2-year, 10-year and 30-year bond yields were seen at 3.67%, 3.71% and 4.01% respectively at one point in contrast to the shape of yield curves elsewhere in the world including It is in the United States and Germany.
One way to explain this is that the bond market believes the economy is strong and the Bank of England's outlook for a deep and prolonged recession in the future is very bleak. This could also indicate upside risks to investors' interest rate expectations.
For its part, the Bank of England said in a December statement,“In the expectations of the monetary policy report issued by the Monetary Policy Committee for the month of November, which was contingent on the high path of interest rates in the market at the time, the British economy was expected to be in a state of recession for a long time and was CPI inflation is expected to remain very high in the near term.”“Inflation was expected to decline sharply from mid-2023, below the target of 2% in the second and third years of the forecast,” the statement added. This reflected a negative contribution from energy prices, as well as the emergence of an increasing degree of economic recession and the unemployment rate is steadily rising.”Sterling forecast against the dollar today:
There is no change in my technical view of the GBP/USD price performance. The general trend is still bearish, and the move around and below the psychological support 1.2000 confirms that.
According to the performance on the daily chart below, forex investors are indifferent to the arrival of technical indicators towards oversold levels, as the pressure factors are still strong and continuous.
Therefore, the bears may have the opportunity to move towards the support levels 1.1965 and 1.1870, This may happen if the US dollar gets a strong momentum from the content of the minutes of the last meeting of the US Federal Reserve and US job numbers.
On the other hand, the pair's bulls need to move towards the resistance level 1.2275, to change the current bearish outlook. The Sterling will be affected today by the release of the British Manufacturing PMI.
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