GBP/USD is preparing to end the year with a whimper, slipping to a new 2021 low at 1.3162 on Wednesday, with potential COVID-related restrictions providing the latest setback for sterling, which remains undermined by doubts over UK rate hikes since the BoE unexpectedly held steady on Nov.
Further divergence in U.S.-UK rate expectations after Dec.
15-16 Fed and BoE policy meetings would push GBP/USD lower toward early October 2020 lows by 1.28.
Media reports of an imminent lockdown nL1N2ST0U1 to arrest the spread of the Omicron variant nL8N2ST2N8 kept market speculation of a rate hike at the Dec. 16 MPC meeting grinding lower BOEWATCH, weighing on GBP/USD.
Traders should now be eying support the 200-week moving averageat 1.3152 and the lower 30-day Bolli by 1.3132.
Diminishing rate-hike expectations have reversed sterling's fortunes after its upbeat start to 2021 on waning Brexit tensions and the successful UK COVID vaccine rollout.
Since the Nov.
BoE meeting, the pound has been weak even against low-for-longer currencies such as the JPY and EUR.
Sterling is now down 2.46% versus the yen and 0.45% versus the EUR over the past six months.
The euro and yen have fallen more than 7% versus the dollar over the same period.
For more click on FXBUZ
GBP Chart: Click here