The Pound-to-Dollar exchange rate is trading below 1.3350, with no clear directional trend ahead of the European day.
In the face of Brexit and commodity-related uncertainty, renewed USD purchasing acts as a headwind for the major. Prospects of a Bank of England rate rise help to minimize the downside.
GBP/USD made a tiny recovery after falling below 1.3300 before the weekend, and it now appears to be on the verge of continuing its technical decline into 1.3400.
With investors increasingly wary of taking risks, the British Pound found it difficult to find buyers on Friday morning.
On the other hand, the significant reduction in US Treasury bond rates impacted the Dollar and managed to keep the GBP/USD from falling further into negative territory.
GBP/USD Technical Evaluation
GBP/USD CHART Source: Tradingview.com
On the upswing, the Pound/Dollar is confronted with static opposition at 1.3360. If a four-hour candle finishes over that level, buyers may look to target 1.3400 (psychological threshold, 50-period SMA on the four-hour graph) and 1.3430 (100-period SMA).
1.3320 (stationary level, 20-period SMA), 1.3300 (psychological level), and 1.3280 (2021-low) are the three levels of support.
Meanwhile, the Relative Strength Index (RSI) signal is rising near 50, indicating that sellers are not exhibiting any interest in the market at this time.
An Overview Of The Fundamentals
Even though the Dollar has maintained its strength against its key competitors at the beginning of the week, the GBP/USD has continued to rise as risk sentiment has improved.
Following the discovery of numerous instances of the highly evolved coronavirus strain “Omicron” in the United Kingdom over the weekend, British Health Secretary Sajid Javid stated that the government was nowhere close to enacting social distancing measures in the country.
According to the BBC, Javid has also stated that face masks will be required in all stores and on public transportation starting on Tuesday.
On Monday, the junior minister of health of the United Kingdom, Edward Argar, stated that they do not anticipate any additional tightening of regulations in the next 3 weeks.
The balance of the day’s economic calendar in the United States will be devoid of high-quality data releases, but investors will be paying particular attention to reports relating to a coronavirus variation that has been identified.
So far, it does not appear that the new variant will have an impact on the Federal Reserve’s policy outlook; however, market players will be paying particular attention to any remarks made by FOMC officials before the blackout period begins on Saturday.
Even if the Bank of England (BoE) raises interest rates by a quarter percentage point on Thursday, December 16, the Pound is expected to trade sideways in the immediate term.
Looking ahead to 2022, analysts at HSBC predict that the Pound will continue to fall as economic headwinds weigh on the forecast for interest rates in the United Kingdom.