The British Pound Extends Its Losses :: InvestMacro

By RoboForex Analytical Division

The pound stays on the again foot towards the US greenback, pressured by rising market conviction that the Financial institution of England (BoE) will maintain its accommodative financial coverage stance for longer than the US Federal Reserve. The most recent UK inflation figures confirmed a noticeable cooling in worth pressures, successfully extinguishing expectations of additional rate of interest hikes from the British central financial institution.

Conversely, Federal Reserve officers proceed to strike a hawkish tone of their public remarks, signalling that US rates of interest are prone to stay at elevated ranges for an prolonged interval. This coverage divergence is bolstering the US greenback’s enchantment, strengthening its place as a high-yielding, safe-haven asset.

Home headwinds are additionally weighing closely on sterling. A latest contraction in enterprise exercise throughout each the providers and manufacturing sectors (with PMI readings falling beneath the 50.0 threshold) factors to a possible recession within the fourth quarter. Confronted with a slowing financial system, weakening home demand, and chronic value pressures, the BoE is predicted to pause its tightening cycle, leaving the foreign money susceptible to additional promoting.

Compounding these components, a powerful intermarket backdrop for the greenback – characterised by rising US Treasury yields and a strengthening DXY index – is offering each technical and elementary help for the GBP/USD downtrend.

Technical Evaluation: GBP/USD

H4 Chart:

On the H4 chart, GBP/USD has been consolidating round 1.3340. The first situation suggests a downward breakout from this vary, initiating a 3rd wave of decline in direction of 1.3213. It is very important observe that that is solely an intermediate goal; the broader bearish wave construction carries a major goal close to the 1.2963 space. This outlook is technically confirmed by the MACD indicator, whose sign line stays beneath zero and is pointing firmly downward, indicating sustained bearish momentum.

H1 Chart:

The H1 chart exhibits the market forming the primary leg of a broader third wave downward. The instant draw back goal is 1.3276. Upon reaching this degree, a short-term corrective rebound to no less than 1.3330 is feasible. Following such a correction, a resumption of the decline in direction of 1.3240 and 1.3213 is predicted, which might possible full the present wave construction. The Stochastic oscillator corroborates this view; its sign line is beneath 50 and is trending in direction of the oversold territory (20), reinforcing the chance of continued downward motion.

Conclusion

The confluence of a dovish BoE coverage shift, resilient US hawkishness, and deteriorating UK financial information creates a powerfully bearish surroundings for Sterling. Technically, the trail of least resistance is firmly to the draw back, with key targets established at 1.3213 and finally 1.2963.

Disclaimer:

Any forecasts contained herein are based mostly on the writer’s explicit opinion. This evaluation is probably not handled as buying and selling recommendation. RoboForex bears no duty for buying and selling outcomes based mostly on buying and selling suggestions and evaluations contained herein.