GBP/USD slides to 37-year low, EUR/USD also lower while EUR/GBP rallies
EUR/USD and GBP/USD tumble while EUR/GBP rallies.
EUR/USD resumes its descent
EUR/USD’s slide from Monday’s $1.0198 peak has so far taken it to this week’s low below parity amid worse than expected US inflation data earlier in the week which prompted market participants to expect further aggressive Federal Reserve (Fed) tightening at next week’s Federal Open Market Committee (FOMC) meeting and which led to the US dollar appreciating. Some traders now expect to see a 100-basis points (bps) rate hike at next week’s FOMC meeting instead of the previously anticipated 75-bps hike.
The late August low at $0.9901 is next in line while the cross stays below Wednesday’s high at $1.0023. Further down lies the early September low at $0.9865 which may soon be revisited as well. Good resistance above parity and $1.0023 remains to be seen at the $1.0079 to $1.0097 late July low and late August highs. Whilst below these, the cross retains a bearish bias.
EUR/GBP trades in 1,5-year highs
EUR/GBP’s rally to above the £0.8722 June and early September peaks as UK retail sales show their biggest decline so far this year by sinking by 1.6% month-on-month (MoM) in August versus an expected decline of 0.5% and a rise of 0.4% in July, has taken the cross to levels last traded in February 2021.
If Friday’s rise above £0.8722 were to also be followed by a daily and weekly chart close above this level, a significant break out of a key one-and-a-half-year resistance zone would unfold which would open the way for the £0.8797 early February 2021 high to be reached. Good support comes in at previous resistance, that is to say at the June and early September highs around the £0.8722 level.
GBP/USD weakens to 37-year low
With the UK August core inflation rate accelerating to its highest level since 1992 and retail sales falling by the most this year, the GBP/USD is trading at levels last seen in 1985. This is the case despite the Bank of England (BoE) expected to raise its rates by 50 or 75bps next Thursday, following a 165-bps increase since December of last year.
GBP/USD has fallen by over 3% from Tuesday’s high at $1.1738 and is now trading below its $1.1406 37-year early September low with a four-month support line at $1.1259 being eyed. Further down lurks a minor psychological level at $1.1 and much further down lies the 1985 low at $1.0345. Minor resistance above the 7 September low at $1.1406 can be seen around the $1.15 mark and further up at Wednesday’s high at $1.1589.
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