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Nov 23 - 11:55 AM

GBP/USD - COMMENT-Sterling Slides To New 2021 Low As Mounting COVID Angst Boosts USD

By Paul Spirgel  —  Nov 23 - 09:36 AM

Sterling led major currencies lower versus the dollar on Tuesday, last trading down 0.28% at 1.3358 after hitting a new 2021 low at 1.3344 as rising European COVID cases and lockdown expectations boosted the safe-haven U.S. currency.

Dollar bulls are also feasting on widening U.S. rate spreads with other developed countries, which has been particularly stark versus the UK.
U.S.-UK 5-year rate spreads have risen from +33bps in early November to +61bps after the BoE held rates steady.
M
arkets have reduced BoE December hike expectations from a lock on +25bps to a tepid +15bp hike.

GBP/USD's drubbing after Jerome Powell's re-nomination to a second term as Fed chair has exacerbated sterling's difficulties.
Recent EUR/GBP selling has also abated, owing to reduced UK-EU rate differentials, with cross traders unwinding shorts, below 0.8400, as post-summer hawkish BoE tones ebb.

GBP/USD is finding support by its lower 30-week Bolli at 1.3359.
However, a close below 1.3359 puts the 100-week moving average at 1.3291 in sharper focus and opens the way for a test of 200-WMA support by 1.3160.

GBP/USD bulls need to regain the 10-day moving average by 1.3423 to stall the bearish tide and a rise above the 50% Fib of 1.3834-1.3344 at 1.3589 is needed to regain momentum.

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Source:
Refinitiv IFR Research/Market Commentary

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