Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
GBP/USD Outlook: GBP Snaps Five-Day Losing Streak Against the Greenback, UK Policy Uncertainty Remains

GBP/USD Outlook: GBP Snaps Five-Day Losing Streak Against the Greenback, UK Policy Uncertainty Remains

Zain Vawda, Analyst
GBP Forecast
GBP Forecast
Recommended by Zain Vawda
Get Your Free GBP Forecast
Get My Guide

GBP/USD Fundamental Backdrop

Sterling saw a bounce against the greenback yesterday snapping a five-day losing streak in the process. As much as markets would like to believe we have seen the end of the recent seesaw price action which has become a theme of late, optimism may be misplaced. The Bank of England (BoE) did not cover itself in any glory this week as rhetoric continually shifted regarding the end of its bond buying scheme with the uncertainty weighing on the pound.

The BoE released its Financial Policy Summary yesterday stating that they are responding to severe risks to the UK’s financial stability. The report went on to say that UK households and businesses are under financial pressure with the only positive being that consumers have less debt than before the global financial crisis. This in turn should keep defaults relatively low with banks now required to be flexible in their response.

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

Rumors continue to rumble that Prime Minister Truss is under increasing pressure, with some of her senior advisors of the opinion that last month’s mini budget needs to go. The growing disconnect between Chancellor Kwarteng and BoE Governor Andrew Bailey has not helped matters, evidenced by comments at the IMF annual meeting in Washington DC. The Chancellor stated that any volatility and turmoil following Friday’s withdrawal of support by the central bank “is a matter for the governor”. This continued uncertainty around the UK’s Fiscal and Monetary policy mix continues to hamper sterling.

image1.png

For all market-moving economic releases and events, see the DailyFX Calendar

Later in the day we have US CPI data which promises to inject some volatility and quite possibly direction for the pair moving forward. A softer CPI print from the US could result in a push higher for the pair despite the continued hawkish rhetoric from Fed policymakers. A further increase in the inflation print could push the pair back below the 1.10 level and open up the possibility of further downside.

GBP/USD Daily Chart – October 13, 2022

Chart, histogram  Description automatically generated

Source: TradingView

From a technical perspective, we have seen the pair staircase its way lower since meeting the key psychological 1.15 level. Sterling did snap a five-day losing streak against the greenback yesterday with gains of around 120-odd pips.

Yesterday’s bullish engulfing daily candle close hints at further upside for the pair with the US CPI potentially providing the catalyst. A bounce higher for the pair would first need to clear the 1.15 psychological level which currently lines up with the 50-SMA providing an area of confluence. Alternatively, should dollar strength return post CPI we could see a break below the 1.10 level with a test 0f 1.0860 support a possibility.

Key intraday levels that are worth watching:

Support Areas

•1.1000

•1.0860

•1.0500

Resistance Areas

•1.1175

•1.1363

Introduction to Technical Analysis

Candlestick Patterns

Recommended by Zain Vawda

Start Course

Resources For Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicators for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

Written by: Zain Vawda, Markets Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES