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MENAFN- Daily Forex)
The continued strength of the US dollar since Trump's victory has been supporting the downward trend of the GBP/USD currency pair, which recently plunged to the support level of 1.2487, the pair's lowest in six months. Before closing the week's trading around the 1.2528 level, the downward performance is expected to continue until new strength factors emerge for the sterling. According to Forex market trading, the GBP/USD pair has declined by 2.86% since the beginning of this month. Recently, the pound sterling has depreciated by 1.59% against the US dollar since the beginning of 2024.
Disappointing UK Economic Performance
The UK prime minister has pledged to achieve sustainable economic growth of 2.5% a year and improve living standards, a challenge for an economy that has been suffering from almost stagnant productivity since the global financial crisis of 2008-09. According to the economic calendar results, UK inflation accelerated more than expected in October to well above the Bank of England's 2% target. UK consumer price inflation was reported to have risen by 2.3% from a year earlier after rising energy bills. Services inflation – closely watched by price makers for signs of domestic pressure – remained high at 5%.
The performance of the pound sterling against the dollar will remain under significant pressure, which is understandable given that the US economy continues to grow at a strong pace, with more growth expected in the future as Donald Trump's pro-growth policies are awaited. Compare this to the situation in Britain, where the new government has hit businesses with huge tax increases, minimum wage hikes, and additional burdens from labour law.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Future of Bank of England Policy
Market pricing shows that investors have raised their expectations for the number of interest rate cuts that the Bank of England will make next year from two to three. Currently, the chances of a UK interest rate cut in December remain low, but a cut in February 2025 is now fully priced in Analysis for the GBP/USD pair today:
According to the daily chart performance, the overall trend of the GBP/USD currency pair remains downward. As mentioned before, moving below the 1.2500 support level will further strengthen the bears' control of the trend. The continued strength of the current US dollar factors may push the GBP/USD pair to stronger downward levels, the closest of which are currently 1.2465, 1.2330, and 1.2200, respectively, which in turn will move all technical indicators towards oversold levels. Furthermore, any upward rebound of the GBP/USD pair will be a target for selling again for now.
EURUSD Chart by TradingView
You should note that the US holidays this week may negatively affect sentiment and liquidity in the markets. Therefore, it is wrong to make decisions until after the holidays and the volume of liquidity returns to avoid sudden movements that affect trading investments. Also, you can view free live trading signals for the GBP/USD pair and other distinctive trading signals on our website.
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