The British pound continued its decline against the U.S. dollar on Tuesday, with GBP/USD touching an intraday low of 1.22383 before closing slightly higher at 1.22732. A massive UK market selloff and a cautious Bank of England outlook have kept the Pound struggling.
Across the pond, the Fed has led the charge with its hawkish stance, maintaining pressure on the pair as the US Dollar sees a multi-decade high.
Picture: GBPUSD falls to 1.227, testing key support at 1.223 as bearish momentum dominates trading sentiment, as seen on the VT Markets app.
The 21-week EMA crossing below the 55-week EMA underscores sustained downside momentum. This bearish signal and weak fundamentals suggest further declines in the coming weeks.
With the current bearish momentum intact, GBPUSD may test support near 1.2230 in the short term. A break below this level could bring 1.2039 into focus. However, oversold conditions on some technical indicators could trigger a brief recovery.
The Pound held its head above rising waters briefly on recent announcements of the potential for President-elect Donald Trump’s tariffs to apply only to critical exports but floundered in light of the UK options market fearing a Truss-esque policy reprisal.
The Dollar’s strength comes not just from its better-than-expected JOLTS data and services sector activity. The 10-year US Treasury Yield saw a hike of nearly 5% in recent weeks, drawing in more intrigue from market participants in the greenback.
For now, GBP/USD will likely stay under pressure unless the pound finds support from stronger-than-expected U.K. economic data or shifts in market sentiment.
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