GBP/USD Avoided New 2022 Lows, but Remains in a Precarious Position
GBP/USD Analysis
The pair comes from a losing week in which risk-aversion and fears of global slowdown persisted, but managed to avoid news 2022 lows on Friday, despite the slump. GBP/USD found support and tries to be upbeat today, as the greenback faces difficulties.
Although we can see a recovery, breaking above the EMA200 (1.2350) which could pause the downward bias, looks like a tall order, while the area form there-on looks unfriendly.
Bears remain in control and have the ability to set new lows and test 1.1904, but the next major support at 1.1681 looks distant at this stage.
The monetary policy differential is unfavorable for the pair, since the Fed is committed to its aggressive and front-loaded tightening cycle, after having delivered its biggest rate hike in nearly thirty years last month. The Bank of England has increased rates five times in a row in order to fight surging inflation, but fears of a recession may limit its ability to do more.
Governor Bailey refrained from talking about more aggressive 50 basis points hike during last week's remarks at the ECB Forum, but said that "there will be circumstances in which we will have do to do more" [1]. Incoming policy maker Dr Swati Dhingra sounded dovish during her appearance at the Treasury Committee of the UK Parliament, talking of a "very gradual approach". [2]
One also has to take into account the political landscape in the Old Albion, which could potentially generate more uncertainty down the road. The UK Prime Minister survived the recent no-confidence vote, but the Conservative party lost two by-elections, while the Scottish First Minister proposed a new Independence Referendum. [3]
Stocks markets in the US are closed today and the economic calendar does not feature any major release form the UK.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 04 Jul 2022 https://www.youtube.com/watch | |
| Retrieved 04 Jul 2022 https://www.parliamentlive.tv/Event/Index/bd63d985-8321-4257-90b1-b7d7acaa75e2 | |
| Retrieved 19 Apr 2026 https://www.gov.scot/news/next-steps-in-independence-referendum-set-out/ |
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