The Cable (GBPUSD) remained under pressure on Tuesday, falling to an intraday low of 1.21747 before staging a modest rebound to close near 1.22125.
This reflects the ongoing bearish momentum for the pound, which has declined 2.5% against the dollar this month. This drop follows the struggles of the British government in navigating the post-Brexit instability and an unexpected inflation dip in December.
Hedge funds have intensified short positions on the pound, contributing to heightened volatility. Market participants are now charging up to 30 basis points for lending gilts, nearly double the historical average, as demand for speculative selling grows.
Picture: GBP/USD faces downward pressure, slipping to 1.2212 after a brief recovery, as seen on the VT Markets app.
The chart confirms persistent volatility, with GBP/USD testing lows near 1.21747 before consolidating. The MACD indicator shows a temporary easing in bearish momentum as prices rebound but fail to reclaim the 1.22444 high.
Short-term moving averages suggest ongoing downward pressure, reflecting the bearish sentiment highlighted in the article.
The Pound is feeling the weight of surging UK debt costs, with long-term borrowing hitting a 27-year high, eroding confidence in the economy. Adding to the strain is a political shift as Nigel Farage’s Reform Party gains momentum in recent polls.
Traders are increasingly cautious, watching how the Bank of England navigates the dual challenge of soaring debt and political risks while managing inflation and a weakening currency.
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