Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The GBP/USD pair falls below the 1.3000 barrier and trades with losses of more than 0.20% as the US dollar strengthens and the technical picture indicates that momentum is still bullish and the RSI is still positive despite the recent decline. Watch out for these important support levels: 1.2894, 1.2861, and 1.2817. If buyers retake 1.3000, resistance will be at 1.3044 and 1.3100.
On Thursday, the value of the pound sterling fell against the US dollar despite strong statistics from the UK and signs of weakening in the US jobs market. However, the US dollar’s strength and high US Treasury yields caused the GBP/USD pair to drop below 1.3000, losing more than 0.20% of its value.
Buyers of GBP/USD were unable to hold onto gains above the 1.3000 mark, and the pair turned down below it. Nonetheless, the Relative Strength Index (RSI), which is still bullish after moving out of overbought levels, indicates that momentum is still in favor of buyers.
Key support levels will be exposed if sellers manage to keep the major below 1.3000 and accomplish a daily close below the latter. The first demand zone for a further decline in the GBP/USD would be the March 8 peak, which turned into a support at 1.2894, and the June 12 high, which would be at 1.2861. The high on June 4 at 1.2817 would be the next target after those levels are cleared.
If buyers reclaim 1.3000, the first resistance would be the yearly peak at 1.3044, ahead of testing 1.3100. On further strength, the next stop would be 1.3142, last year’s high.
Monetary policy decisions made by the Bank of England are the single most significant influence determining the value of the pound sterling. The BoE bases its judgments on the degree to which it has succeeded in achieving “price stability,” or a constant rate of inflation of about 2%. The main instrument it uses to accomplish this is interest rate modification. The BoE will attempt to control inflation when it is out of control by hiking interest rates, which will make it more costly for individuals and companies to obtain credit.
Higher interest rates make the UK a more alluring location for foreign investors to put their money, which is generally good news for the sterling. An indication that economic growth is slowing down is when inflation drops too low. In this case, the BoE would think about cutting interest rates to make credit more affordable and encourage businesses to borrow more money to fund projects that will spur growth.
