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Pound is Again Approaching the March Lows of 2020

9/7/2022 12:49 PM

The British pound is moderately declining, leveling the attempts of the "bulls" to show corrective growth at the beginning of the week. The GBP/USD pair is testing the level of 1.1450 for a breakdown, approaching the all-time lows of March 2020, updated last Monday.

Support for the US currency was provided by strong macroeconomic statistics from the US, published the day before. The ISM Services Employment Index in August strengthened from 49.1 points to 50.2 points, while the forecast was for a decline to 48.2 points, and the ISM Services PMI over the same period increased from 56.7 points to 56.9 points against the background of preliminary estimates of experts on the decline to 55.1 points. In turn, the ISM Services New Orders Index corrected from 59.9 points to 61.8 points, while analysts had expected a reduction to 57.0 points. The data again reflected the resilience of the US economy, which allows the US Federal Reserve to continue the "hawkish" monetary policy to combat high inflation, especially given the further rise in energy prices.

Today, the focus of investors will be hearing the report on inflation, as well as a number of speeches by representatives of the Bank of England, including its Governor Andrew Bailey.

Traders continue to evaluate the results of the election of the leader of the Conservative Party and Prime Minister of Great Britain, which was won by Liz Truss. The official and the new government will have to focus on problems in the national economy, which, having failed to fully recover from the coronavirus pandemic, is under pressure from recession risks, as inflation updates new anti-records, and the national currency has accelerated the fall against the US dollar to the lows of 1985. In addition, the situation is aggravated against the backdrop of a rapidly developing energy crisis: due to the rise in prices for "blue fuel" after the start of the military conflict in Eastern Europe, consumer prices in the country, according to forecasts by analysts from the investment bank Goldman Sachs Group Inc. may exceed 22.0%, and the economy in this case will shrink by 3.4%.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range expands slightly from below, making way for new local lows for the "bears". MACD is declining keeping a weak sell signal (located below the signal line). Stochastic, on the other hand, remains in an uptrend, retreating from its lows, indicating that the pound is oversold in the ultra-short term.

Resistance levels: 1.1531, 1.1600, 1.1647, 1.1700. | Support levels: 1.1442, 1.1380, 1.1300, 1.1250.

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