What’s “driving” GBP and where is it headed?

Panic at the pumps is causing prices to rise and even causing some stations to close


Growth in the UK seems to have moved into the slow lane as gasoline shortages and lack of truck drivers are causing the GBP to crash.  The panic at the pumps is causing prices to rise and even causing some stations to close, as their wells to run dry.  BP has also said that they may temporarily close petrol stations due to the lack of truck drivers.  (See my colleague Tony Sycamore recap of the fuel panic here.)  The fear and uncertainty is hitting the currency markets and causing the Pound to move lower.

Trade GBP/USD now:  Login or open a new account!

On a weekly timeframe, GBP/USD has moved to its lowest level since January.  Price has stalled just above horizontal support from the highs of December 2019,  near 1.35149.  There is a band of support below, which extends down to 1.3483.  However, if price breaks below, it can run to the 38.2% Fibonacci retracement level from the March 2020 low to the February high near 1.3159.  The 200-week Moving Average also crosses near that level at 1.3157. 


Source: Tradingview, Stone X

On the Daily timeframe, GBP/USD has broken down from a symmetrical triangle and is nearing the previously mentioned support on the weekly timeframe.  Resistance above is at the September 22nd lows of 1.3609 and then the upward sloping trendline of the symmetrical triangle near 1.3650.  Above there, today’s highs provide the next resistance level at 1.3717.


Source: Tradingview, Stone X

The US Dollar isn’t the only currency that the Pound has sold off against.  EUR/GBP put in a high on April 26th near 0.8719 and has been moving lower since then in an orderly channel.  Yesterday, EUR/GBP closed mid-range ion the channel and below the 50 Day Moving Average near 0.8541.  However, with today’s selloff in the Pound, EUR/GBP moved aggressively higher, above the top, downward sloping trendline of the channel and is testing the 200-Day Moving Average at 0.8647.  Above there, horizontal resistance is at 0.8670 and then the April 26th highs at 0.8719. Intraday support is at the September 22nd highs of 0.8613, ahead of yesterday’s highs and the top, downward trendline of the channel near 0.8579 and then the 50-Day Moving average at 08541.


Source: Tradingview, Stone X

If the fears continue that there will be a continued shortage of gasoline at the pumps and gas companies continue to have a shortage of truck drivers, the Pound may continue to fall.  However, if the supply chain loosens and gas beings moving again or if inflation fears from the rising costs of oil overtake the fear of lack of supply, GBP could reverse and head higher!

Learn more about forex trading opportunities.

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.

Open an Account