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GBP / USD falls to daily lows of 1.3770

Yesterday’s close was also coy to remove the 100 day moving average (red line) and we are seeing further rejection of that as the cable falls back below 1.3800 to a low of 1.3770.

One can point to the slight drop in annual UK inflation as a trigger, but in my opinion it doesn’t change much ahead of the BOE policy meeting next month, with core inflation still hovering well above the 2 threshold. % in September.

But the drop in cable also comes as the dollar cuts losses across the board with AUD / USD falling from 0.7500 to 0.7480 and EUR / USD falling from 1.1650 to 1.1630.

Going back to the wire, buyers have work to do in trying to break out of the 100-day moving average @ 1.3800 and then the 200-day moving average (blue line) @ 1.3844.

As mentioned here yesterday, those are key levels that buyers could find some appetite to compete in, but a breakout above that and a run to 1.4000 may be a step too far considering the fundamental context at the moment.
As such, keep an eye out for any change in sentiment in the short term with the 100 hourly moving average resting at 1.3742. A break below that will see sellers change the short-term bias to be more neutral and is a first step for any track back to the downside in the cable.
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