Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GBP/USD At YTD Lows As U.S. Dollar Hits 16-Month Highs

By Matthew WellerForexNov 25, 2021 01:37AM ET
www.investing.com/analysis/sterling-at-ytd-lows-as-us-dollar-hits-16month-highs-200609497
GBP/USD At YTD Lows As U.S. Dollar Hits 16-Month Highs
By Matthew Weller   |  Nov 25, 2021 01:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

As its name implies, the US Thanksgiving holiday is all about expressing gratitude for the good things in life, and despite (or perhaps because of) 30-year highs in inflation readings, US dollar bulls have plenty to be thankful for this year.

After all, looking at the US dollar index, a weighted basket that seeks to measure the performance of the world’s reserve currency against its biggest rivals, the greenback has been at its highest levels in 16 months!

Fundamentally speaking, this move has been driven by traders pulling forward their expectations for monetary policy “normalization” from the Federal Reserve.

While the central bank already announced its tapering plans—and most view that as a precursor to the central bank raising rates—the generally strong data that we’ve seen out of the US in the weeks since the last Fed meeting have some traders speculating that Jerome Powell and company could accelerate the tapering process.

Indeed, this view is increasingly infiltrating even the Fed itself, with Fed members Bostic, Bullard, Clarida, and Waller all seemingly warming to a more aggressive taper.

The hope for dollar bulls is that a more aggressive taper could open the door to an earlier “liftoff” in interest rates. According to the CME’s FedWatch tool, traders are pricing in an 80% chance of at least one hike by the Fed meeting in mid-June 2022, and the market is now pricing in the potential for three or more interest rate increases by the end of next year:

Target Rate Probabilities
Target Rate Probabilities

Source: CME FedWatch

GBP/USD technical analysis

As we noted above, the buck has been rising against all of its major rivals so far, but one of the more interesting pairs is GBP/USD. Cable has been falling within a broader bearish channel for more than six months, with an accelerated bearish channel forming over the last month in particular.

As of writing, GBP/USD was hitting a fresh year-to-date low in the lower-1.3300s, but there was little in the way of meaningful support until the lower 1.3200s, where the lows from Q4 2020 converged with the 38.2% Fibonacci retracement of the entire post-COVID rally near 1.3200.

GBP/USD Daily Chart
GBP/USD Daily Chart

Source: StoneX, TradingView

While continued weakness is the path of least resistance for GBP/USD, there’s at least a chance of a bounce over the US holiday to close the week, with the divergence in the 14-day RSI indicator suggesting that selling pressure may be waning. Regardless, traders were likely to look for selling opportunities on any short-term bounces as long as GBP/USD was below resistance in the mid-1.3400s.

Original Post

GBP/USD At YTD Lows As U.S. Dollar Hits 16-Month Highs
 

Related Articles

JFD Team
Uptrend In GBP/NZD Accelerates By JFD Team - Nov 26, 2021

GBP/NZD traded higher on Friday after it hit support at 1.9370 on Thursday. The advance brought the rate above yesterday’s high of 1.9460, thereby confirming a forthcoming higher...

Kenny Fisher
Euro Jumps On Coronavirus Fears By Kenny Fisher - Nov 26, 2021

The euro has reversed directions on Friday and has posted considerable gains. EUR/USD is trading at 1.1289 in Europe, up 0.75%. The euro is benefitting from fears of a Covid...

GBP/USD At YTD Lows As U.S. Dollar Hits 16-Month Highs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email