Pound hits three-month low

By 12/11/2021News
morning-news

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GBP/USD fell below the 1.34 level on Thursday. Sterling has taken a third hit since the beginning of the month and is in danger of falling another two to four figures against the dollar if some support does not appear. What to expect in the coming days?


GBP/USD

GBPUSD

October optimism gave way to disappointment for the pound in November. Firstly, the Bank of England refused to hike the interest rate on the grounds that the labour market still needs to be monitored. Thereafter all attempts of GBP/USD to recover were offset by dollar rising against a basket of currencies in response to data on record high inflation in USA.
Sterling took a third hit today with weaker than expected UK GDP data for the third quarter. On an annualised basis, the economy grew 6.6% against a forecast of 6.8%. And quarter-on-quarter the recovery was 1.3% – the lowest rate since the start of 2021.
The main reason for the loss of momentum remains supply chain problems. These will not be resolved quickly. However, the IMF is still sticking to its forecast that the UK will be the country with the fastest GDP growth rate in 2021 amongst the G7 countries.
What is happening to the pound against this backdrop? GBP/USD has fallen below the 1.34 level. The weekly chart clearly shows that the mirror zone, which can serve as support, is in the area of 1.3350 – 1.3500. Now the price is approaching its lower boundary. This means that the key moment is about to come: an upward reversal or fixation below.
In case GBP/USD confirms this zone as a resistance, the next target for the fall should be considered in the area of 1.32 and then 1.30.
What can fundamentally support the GBP/USD? Perhaps the speculation of an interest rate hike by the Bank of England in December. There were such expectations last week. The only question is whether the data will be another reason for Monetary Policy Committee members to be cautious for fear of hurting the fragile recovery?
On the other hand, help could come from the Fed if Central Bank officials rush to dampen market hopes for an earlier interest rate hike by weakening the dollar with their statements.

17.00 US Job Openings from JOLTS for September.
17.00 Consumer Sentiment Index from the University of Michigan (USA) for November.


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