GBP/USD Falters on BoE Rate Cut and Civil Unrest

Fundamental Analysis

* Cable Struggle: The pound sterling is under pressure as markets speculate on two more Bank of England (BoE) rate cuts this year. The BoE recently lowered rates for the first time since March 2020, reducing the bank rate by 0.25 percentage points to 5%. BoE Governor Andrew Bailey indicated that future rate decisions would be made individually, but investors are predicting another cut this year, with a 55% chance of it occurring in September. Additionally, ongoing riots in the UK are dampening interest in the pound and raising concerns about the country’s political stability.

Technical Analysis

* Technical Breakout: GBPUSD was traded lower while currently testing the support level 1.26800. MACD which illustrate bearish momentum signal with the formation of death cross suggest the pair to potentially extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.25700 after it breaks below the support level 1.26800. Conversely, a potential reversal is also to be expected and the price could head back towards 1.27950.

Potential Risks

With no significant UK data releases this week, cable traders are turning their attention to next week’s UK labor market figures and the update on the US Producer Price Index (PPI) inflation. Upcoming UK and US Consumer Price Index (CPI) inflation data, along with UK Gross Domestic Product (GDP) growth and US Retail Sales, are also on the agenda. Additionally, the market will continue to monitor the situation with ongoing unrest in the UK.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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