- GBP / USD falls to nearly three-week lows during the early part of Monday’s trading action.
- Nervousness around Brexit weighs on the British pound and puts some pressure amid a modest USD strength.
- Investors now seem reluctant to open aggressive positions ahead of key central bank meetings.
The pair GBP/USD has seen some sales at the start of the European session on Monday and has fallen to lows of almost three weeks, although it has quickly recovered a few pips thereafter. At the time of writing, the pair is trading around the 1.3660-65 level, having previously fallen close to 1.3640.
After a brief consolidation during the first half of the trading action on Monday, the GBP / USD pair encountered further selling and was weighed down by a combination of factors. The current dispute over post-Brexit fishing rights between the UK and France, along with a dispute over the Northern Ireland Protocol, acted as a headwind for the British pound.
In recent events, France seized a British ship last week and the UK threatened retaliatory action. On Sunday, UK Prime Minister Boris Johnson and French President Emmanuel Macron met to ease tension, although they remain in the spotlight. Apart from this, a modest strength in the US dollar put some pressure on the GBP / USD pair.
The dollar held firm near its two-and-a-half-week highs amid the growing acceptance that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. Speculation was further fueled by the release on Friday of the core PCE price index, the Fed’s preferred gauge of inflation, which held steady near 30-year highs in September.
That being said, expectations of an imminent rate hike by the Bank of England they helped limit any deeper losses and helped GBP / USD find some support near 1.3650. Investors also seemed reluctant to open aggressive positions ahead of this week’s major central bank events, the FOMC policy meeting ending on Wednesday and the BoE decision on Thursday.
Therefore, it will be prudent to wait for some continuation selling before investors begin to position themselves for an extension of last week’s rejection drop from the 1.3830-35 resistance zone. Market participants are now looking forward to the UK Manufacturing PMI. Apart from this, the US ISM Manufacturing PMI could provide some boost to the GBP / USD pair.
GBP / USD technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
