GBP/USD - H4
The pair capitulated to the US Dollar's strength after the Fed signaled the conclusion of its asset purchases in early March, the first rate increase in that month and more hikes within the year.
Next week, focus will shift to the Bank of England (BoE) which is forecasted to raise interest rates again when it meets on February 3rd, following December's hike that had surprised many investors. So we will wait to see how the monetary policy differential will affect the pair.
There are also political tensions brewing in the UK, with PM Johnson under pressure to resign, following multiple revelations of Downing Street parties during Covid-19 lockdowns. The PM has been defiant so far, but there are two investigations underway, one from the London Police and one from the Civil Service, which was initially expected to be published earlier this week.
GBP/USD started the day on the offensive, rebounding from two consecutive losing days that led to 2022 lows yesterday (1.3357). As such it may have an opportunity to push for the mid-1.3400s region, although a catalyst will likely be required for a break above its EMA200 (at around 1.3500-20), which would ease downward risk.
Despite the solid start, the Pound erases its gains during the European hours and heads towards the second straight losing week. It is danger of fresh yearly lows towards 1.3320-00, but the 2021 lows (1.3100) are distant for now.
Markets now await PCE Inflation figures from the US (13:30) that could potentially determine the next leg of the move.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.