GBP/USD Skids through $1.25 As Dollar Rallies
Fiona Cincotta March 13, 2020 1:31 PM
GBP/USD drops to fresh 5 month lows
GBP/USD has dropped to fresh session lows through the key psychological level of $1.25 and within a breath of year to date lows. This is the 4th straight session that the GBP has fallen against the strengthening USD.
BoE Minutes - more room to cut
Meanwhile GBP is on the back foot after the BoE released the minutes to its unscheduled policy meeting when it voted to cut interest rates from 0.75% to 0.25%. The minutes show that the BoE expect UK economic activity to weaken over the coming week and months and that they will also have more information on the size of that hit as data starts coming through over Q2. The BoE believes there are still tools in its toolbox and another rate cut is possible.
GBP also appears to be questioning Boris Johnson’s approach to coronavirus. UK school are still open whilst those across Europe and the US are starting to close. There is no ban on large scale public meetings in England yet. A lack of confidence in the approach means the pound sees a bigger financial hit as the virus spreads uncontrolled
In addition to the coronavirus hit to the economy, GBP traders are also fretting about its impact on post Brexit trade talks. Talks next week have been postponed. This put pressure on an already very tight timeline.
US Consumer confidence up next
US Consumer confidence data is next. The release is for March, therefore will reveal the first coronavirus impact. Expectations are for consumer confidence to fall to 95, down from 101 in February which was the second highest reading since the financial crisis. So far, the US economy hasn’t experienced large scale closures but that dean’s mean that the mind of the US consumer isn’t changing. Markets have already priced in a big economic hit from coronavirus as long as consumerism remain relatively optimistic the dollar should hold its gain.
GBP/USD Levels to watch
GBPUSD is trading at fresh 5 month lows, through $1.25. It tades below its 50, 100 & 200 sma on a bearish chart.
It trades at its daily low of $1.2466. Support can be seen at $1.2450 and $1.2350 lows from October last year.
Support can be seen at $1.2625 (today’s high) , $1.2705 (200 sma) and $1.2745 (low 3rd March).
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.