February 24, 2024
London, UK

GBPUSD The Bloodbath Continues

GBPUSD

GBPUSD plunges to fresh all-time lows at 1.0359 during Asian trading marking the biggest one-day fall and extending the previous week’s slide. As of writing GBPUSD trades at 1.0548 the lowest level since February 1985.

The Pound slump came after the British Chancellor of the Exchequer Kwasi Kwarteng’s who has been at the office since September 6th announced plans to impose huge tax cuts while boosting spending paid by increases in borrowing up to 72 billion pounds.

The Bank of England raised interest rates by 50 basis points last week following the Fed and Swiss National Bank in the fight against rising inflation.

From a technical perspective, the pound panic started after GBPUSD broke below 1.14 the coronavirus era lows. The slide accelerated as stop losses hit at 1.12 while the move below 1.10 created panic selling which accelerated in a volume-thin Asia session today. As volatility skyrockets in the pair, a test at the parity level can’t be ruled out given the USD strength.

Is it Time for BOE Intervention?

Traders now wait for an intervention by the Bank of England. The question is if the intervention would be just verbal or the central bank would proceed with an emergency rate hike. Last week Bank of Japan intervened in the markets to stop the Yen free fall against the US dollar.

An intervention might send the GBPUSD above 1.0848 the daily high which will offer a short breath for the bulls. Strong resistance for the pair stands at 1.1274 the Friday’s high, while more sellers await at 1.1385 the top from September 21. High volatility and deeply oversold levels might provide a bounce, but the critical question is if the rebound would be sustainable.  

In equities markets, Asian indices are trading mostly lower. Nikkei 225 is down 2.47% and Sensex is down 1.61%. US futures are pointing to a negative start. S&P 500 futures trading 0.86% lower at 3,662, Nasdaq is 0.98% lower at 12,178 and Dow Jones is 0.67% lower at 29,383.

In forex markets the US dollar index (DXY) adding 0.87% at 113.80. EURUSD started the week 0.63% lower at 0.9628 while USDJPY is 0.61% higher at 144.16.

Previous Article

Can Bitcoin Break Above $19,000 After a Quiet Weekend?

Next Article

OECD: The world economy is slowing more than anticipated

You might be interested in …

USDINR

USDINR Steady After RBI Interest Rate Hike

USDINR is trading unchanged after the central bank of India (RBI) six-member Monetary Policy Committee delivered the third 50 basis point interest-rate hike in its attempt to battle inflation in the country while targeting to protect the economy

GBPUSD

GBPUSD Pushes Higher on Economic Data

GBPUSD trades higher on better-than-expected economic data released earlier today. The UK economy expanded by 0.1% in November 2022 well above the forecasts for a 0.2% contraction.

Forex Markets

Forex Today

Forex market and the U.S dollar index trying to stabilize after yesterday’s sell-off and a strong rebound in the equities markets. The U.S CPI came in at 8.2%, year over year, above the consensus of 8.1%.