The GBP/USD Slump:Factors Behind the Pound's Recent Depreciation

11 בנוב׳

The GBP/USD currency pair has experienced a decline, currently hovering around 1.2890 as this article is being composed during the European market opening on Monday. The US Dollar (USD) is gaining strength following Donald Trump’s electoral victory, impacting the major currency pair as traders anticipate that inflationary pressures will prevent the Federal Reserve (Fed) from making significant interest rate cuts.

In contrast, the Bank of England (BoE) has emphasized the necessity of maintaining a gradual and cautious approach to monetary policy adjustments, suggesting that a restrictive stance will need to persist for an extended period. The BoE's less dovish tone may help mitigate the Pound's losses in the short term.

The Pound has notably depreciated against the increasingly robust USD, which continues to benefit from the optimistic market reaction to the Republican win. According to the Stochastic indicator, the DXY is recovering from oversold conditions, indicating potential further gains for the Dollar.

Moreover, recent data from the Commitment of Traders (COT) report indicates a rise in long positions among retail investors, while institutional traders—referred to as "smart money"—have remained relatively stable in their positions, maintaining levels below 50% in net positions.

Our analysis has identified a demand zone situated between 1.2800 and approximately 1.2700, which may serve as a key area of support for the Pound.

In conclusion, the immediate outlook for the British Pound and other currencies in relation to the DXY appears bearish, influenced by the prevailing market conditions and geopolitical factors at play.


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12 בנוב׳

עסקה פעילה

The GBP/USD currency pair is experiencing intensified downside momentum, currently attacking the 1.2800 level and slipping below it as I write this update. The decline follows the release of UK labor data, which revealed that the ILO unemployment rate rose to 4.3% for the quarter ending in September, surpassing the anticipated 4.1%. While this presents a concerning picture for the UK economy, the potential for higher wage inflation could provide some support against further losses.

Despite these mixed signals, the primary focus remains on the strength of the US dollar and forthcoming comments from Federal Reserve officials, which could influence market sentiment. As forecasted, GBP/USD has reached one of our designated demand areas, yet the prevailing bullish trend of the USD undermines any near-term recovery for the pound.

Currently, the outlook remains bearish, with continued pressure on the GBP/USD pair. Traders are advised to wait for a clear rejection of demand levels before considering a long setup, emphasizing the importance of navigating this volatile landscape with caution while keeping a close eye on evolving economic indicators and Fedspeak.