(
MENAFN- Daily Forex) The GBP/USD continues to be sold in a strong fashion. Yes, the currency pair is correlating to the broad Forex market as the USD shows significant strength.
- And the U.S jobs numbers came in stronger than anticipated this past Friday which also caused more nervousness among financial institutions and selling of the GBP/USD.
- However, the shadow of poor decision making by the Bank of England regarding their interest rate policy has done the GBP/USD no favors.
- Economic data from the U.K was lackluster before going into the interest rate decision of the BoE on the 19th of December, but the Bank of England did not cut interest rates.
The Federal Reserve which issued a cautiously sounding amount of rhetoric the day before on the 18th about future interest rate cuts in the U.S likely being slowed, actually did cut the Federal Funds Rate. A contradiction of large proportion Pressure and Nervous Financial Institutions
Behavioral sentiment in financial institutions is clearly nervous globally. Yields in government bonds worldwide are increasing as investors have turned not only risk adverse, but also outwardly upset regarding central banks. The USD has gotten stronger across the board. The bearish trend in the GBP/USD is comparable to the trend lower in the EUR/USD. The GBP/USD went into this weekend holding onto support, but did sustain lows below the 1.22000 mark.
The GBP/USD was trading above the 1.34000 mark momentarily in late September. A combination of factors have weighed upon the British Pound, unclear outlook from the U.S Fed, the election of Donald Trump – who takes power in one week, but the perceived overly cautious attitude of the Bank of England has hurt too. The selling of the GBP/USD has been seen before, but the selling of the currency pair the past few weeks has brought key psychological price levels into sight which may not have been seen if the BoE would have been more dovish in December.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money New Resistance Levels and Support Consideration for the GBP/USD
Nervous selling in Forex was widespread on Friday. Price velocity lower in the GBP/USD was fast. The currency pair was near the 1.23200 ratio on Friday when the U.S jobs numbers were published. The selling brought the 1.22000 mark quickly into sight. Early trading this coming week is likely to remain nervous. Looking for more bearish price action in the GBP/USD may feel like it is looking for too much weakness, but the trend lower in the currency pair has not produced a solid line of defense yet.
- Behavioral sentiment in financial institutions may believe the mid-term should be better for the GBP/USD and produce upwards momentum, but timing the moment a reversal higher is suddenly going to emerge is problematic.
- The BoE is now in a position in which it will likely have to cut interest rates sooner than the Federal Reserve can.
- The notion of central bank contradictions being considered will cause more choppiness in the near-term and likely for the coming weeks.
GBP/USD Weekly Outlook:Speculative price range for GBP/USD is 1.19970 to 1.23520
The GBP/USD may feel like it is oversold to many speculators, but selling has been strong for a while and there are few signs allowing for notions of a sudden reversal higher to emerge. The 1.22000 level should be watched early this week. If trading in the GBP/USD remains under the 1.22000 mark, this will highlight the USD remains intrinsically strong and may hold its ground in the coming days. Volatility is likely going to be seen this week.
Moves higher in the GBP/USD that test technical resistance levels may produce wagers looking for reversals lower. Yes, at some point the value of the currency pair should run into solid buying, but financial institutions that do not like what they are hearing and seeing from the Bank of England may continue to punish the GBP/USD until they feel an attitude adjustment is being demonstrated.
EURUSD Chart by TradingView
Ready to trade our weekly forecast ? Here's a list of some of the top forex brokers UK to check out.
MENAFN12012025000131011023ID1109081359
Comments
No comment