Market news
25.11.2021, 12:11

GBP/USD struggles near YTD low, bears await a break below 1.3300 mark

  • GBP/USD struggled to preserve modest intraday gains and refreshed YTD low on Thursday.
  • Mixed Brexit signals attracted bears at higher levels despite some USD profit-taking slide.
  • The fundamental backdrop supports prospects for a further near-term depreciating move.

The GBP/USD pair refreshed YTD low during the mid-European session, albeit lacked follow-through and so far, has managed to hold above the 1.3300 round-figure mark.

The British pound drew some support on Thursday from the latest signs that a further breakdown of the post-Brexit UK-EU relations is not imminent. Reports indicate that Britain would hold off suspending parts of the Brexit divorce deal relating to Northern Ireland for as long as talks with the EU remain constructive. This, along with the firming expectations for an interest rate hike by the Bank of England in December, assisted the GBP/USD pair to gain some positive traction during the early part of the trading action on Thursday.

On the other hand, the US dollar witnessed some profit-taking following the recent strong runup to a 16-month peak and contributed to the GBP/USD pair's early uptick. That said, the worsening row over the post-Brexit fishing rights between France and Britain kept a lid on any meaningful gains for the sterling. In the latest development, French fishermen were reportedly planning to block British vessels' access to French ports in protest against Britain's refusal to grant them more licences to operate in UK territorial waters.

Meanwhile, the USD corrective pullback remained cushioned amid growing market acceptance that the Fed would be forced to adopt a more aggressive policy response to contain rising inflationary pressures. The bets were reinforced by Wednesday's release of the US PCE Price Index, which accelerated to a 30-year high in October. Adding to this, the minutes of the November FOMC meeting revealed that were open to speeding up the tapering of the bond-buying program and moving quickly to raise interest rates if high inflation persists.

The fundamental backdrop favours bearish traders, though relatively thin liquidity conditions on the back of the Thanksgiving holiday in the US warrant some caution. This makes it prudent to wait for a sustained break through the 1.3300 round figure before positioning for an extension of the recent decline from levels just above the key 1.3500 psychological mark.

Technical levels to watch

 

© 2000-2021. All rights reserved.

This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Feedback
Live Chat E-mail
Up
Choose your language / location