GBP/USD fell on Wednesday to the latest in a series of two-year lows as the dollar drove relentlessly higher on global inflation and recession fears while UK political tumult added to sterling-negative domestic factors, the combination of which could push the pound back to its pandemic low of 1.1413.
With little technical support between its latest low of 1.1877 and the March 2020 trough, cable will be hard pressed to avoid falling back to that level.
Any interruption in the one-way traffic lower would have to produce a rise above 1.2104, the 50% Fibo of the 1.2331-1.1877 fall, and also 1.2269 -- the 50% Fib of the 1.2660-1.1877 -- to stanch the bleeding.
But few fundamental factors currently argue for a sterling recovery, with PM Boris Johnson beset by cabinet resignations [nS8N2WC07A nL8N2YN425 and the monetary policy backdrop unsupportive since the BoE indicated in March that it would temper its inflation fighting to foster growth.
Rising post-Brexit tensions with the EUover Northern Ireland, accelerating UK inflation at a G7-high 9.1%, energy supply issues and fears of a global slowdown leave the pound in a deep hole.
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