Yesterday and today, the GBP/USD rate fell below 1.27 for the first time since July 6. A number of factors contributed to this:
- strengthening of the US dollar index due to downgrading of the US credit rating by Fitch;
- strong data on the ADP labor market — the number of jobs in the US, excluding the agricultural sector, increased by more than 300k over the month;
- market expectation of news from the Bank of England, which will publish its interest rate decision today at 14:00 GMT+3.
According to Reuters, forecasts for the UK economy are disappointing. Market participants expect a 14th rate hike by the Bank of England by 0.25%.
Technical analysis of the GBP/USD chart shows that:
- summer peaks formed an important head-and-shoulders pattern;
- the neckline, which can be drawn through the median line of the ascending channel, has already been broken after a weak rebound in the last days of July.
The pound, which looks weak against the US dollar, may be supported by:
- encouraging words from the head of the Bank of England;
- block of support formed in the area of 1.2600 from the low of June, the lower border of the channel and SMA (100).
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