- GBP/USD extends to four days its fall, down almost 1.5%.
- Risk-off market sentiment dented the prospects of risk-sensitive currencies like the British pound, favors the greenback.
- The US Dollar Index is closing to 97.00 after the renomination of Powell amid positive US jobs data.
The British pound continues its free-fall, down for the fourth consecutive day, reaching a new year-to-date low around 1.3324, down some 0.34%, trading at 1.3334 during the New York session at the time of writing. On Wednesday, the market sentiment is downbeat, as portrayed by US equity indices falling. In turn, FX risk-sensitive currencies like the GBP, the AUD, and the NZD, record losses in the day against the greenback.
Meanwhile, the US Dollar Index, which measures the buck’s performance against a basket of six rivals, advances 0.45%, sitting at 96.92, closing to the 97.00 figure, that despite that, the US 10-year Treasury yield remains unchanged at 1.669%.
On Wednesday, the UK economic docket featured Sylvana Tenreyro, Bank of England (BoE) Monetary Policy Committee (MPC) member. Tenreyro said she would not want to say specifically if the BoE would raise rates in December or February when the central bank updates its economic projections.
In the meantime, across the pond, a full US macroeconomic docket ahead of Thanksgiving unveiled the US Initial Jobless Claims, Durable Goods data, GDP, and the Fed favorite gauge of inflation, the Personal Consumption Expenditure figures.
The Initial Jobless Claims for the week ending on November 20 increased up to 199K, better than the 260K estimated by analysts, the lowest since 1969. Moreover, Durable Good Orders for October (MoM) shrank to 0.5% more than the 0.4% contraction expected by market participants. However, orders excluding transportation rose more than estimations, up to 0.5% vs. 0.2%, for the same period. Further, the US GDP for Q3 grew by 2.1%. In line with market participants’ expectations.
Moving to the Federal Reserve’s favorite gauge for inflation, the Personal Consumption Expenditure (PCE) Price Index increased by 4.1% YoY in October, in line with the median economist forecasts and confirmed a 0.4% rise from last month’s upwardly revised reading of 3.7%.
GBP/USD Price Forecast: Technical outlook
Cable continues trading within a descending channel, with the daily moving averages (DMA’s) with a downslope above the spot price, confirming the bearish bias. Two days ago, the GBP/USD broke below the September 29 swing low 1.3411, a crucial support level exposing the bottom-trendline of the descending channel. Additionally to those two bearish signals, the Relative Strength Index (RSI), a momentum indicator, is at 34, aiming lower, with sufficient room, to extend the British pound fall vs. the US dollar.
In the outcome of a downtrend continuation, the following support would be the 1.3300 figure, followed by the bottom-trendline of the descending channel, around the 1.3250-1.3300 area. A breach of the latter would expose the 1.3200 price level.
On the flip side, the first resistance would be 1.3400. A break of that level would expose the November 18 cycle high at 1.3513, followed by the confluence of the 50-DMA and the November 9 swing high around 1.3607.