The GBP/USD currency pair has been experiencing a bearish trend in recent times, with the bears showing significant strength and targeting the 1.2620 level. This analysis is based on various factors that have influenced the price movement of the currency pair.
One of the primary factors that have contributed to the bearish trend of the GBP/USD is the ongoing Brexit negotiations. The uncertainty surrounding the outcome of these negotiations has led to a lack of confidence in the British pound, causing it to weaken against the US dollar. The recent announcement by UK Prime Minister Boris Johnson that he intends to pass a law that would override parts of the Brexit withdrawal agreement has further added to the uncertainty and volatility in the market.
Another factor that has contributed to the bearish trend of the GBP/USD is the economic impact of the COVID-19 pandemic. The UK has been hit hard by the pandemic, with a significant number of cases and deaths. The economic fallout from the pandemic has led to a decline in economic activity, which has negatively impacted the value of the British pound.
Furthermore, the US dollar has been strengthening against other major currencies due to its status as a safe-haven currency. The ongoing trade tensions between the US and China, as well as the upcoming US presidential elections, have led investors to seek refuge in the US dollar, causing it to appreciate against other currencies.
Technical analysis also supports the bearish trend of the GBP/USD. The currency pair has broken below its 200-day moving average, indicating a shift in momentum towards the downside. Additionally, the Relative Strength Index (RSI) is currently below 50, indicating that the bears have more control over the market than the bulls.
In conclusion, the analysis of GBP/USD price indicates that bears are showing strength and targeting the 1.2620 level. The ongoing Brexit negotiations, economic impact of COVID-19, and strengthening of the US dollar are all contributing factors to the bearish trend of the currency pair. Technical analysis also supports the bearish trend, with the GBP/USD breaking below its 200-day moving average and the RSI indicating more control by the bears. Traders and investors should closely monitor these factors and adjust their trading strategies accordingly.
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