Pound Sterling Price News and Forecast: GBP/USD to retest the flash crash lows?

GBP/USD Forecast: Pound stays resilient as BOE remains active

GBP/USD has managed to climb into positive territory above 1.1050 during the European trading hours on Tuesday after having tested 1.1000 earlier in the session. The near-term technical outlook shows that the pair could extend its rebound if it manages to clear the 1.1140 resistance. The risk-averse market environment, however, could make it difficult for the pair to gather bullish momentum.

Earlier in the day, the Bank of England (BoE) announced that it intends to purchase index-linked gilts and reiterated that it stands ready to purchase up to 10 billion sterling of gilts each day until the end of the week. Following this announcement, the 10-year UK bond yield, which gained more than 4% on Monday, edged lower and turned negative on the day near 4.4%. Hence, improving market conditions seems to be helping the British pound hold its ground for the time being. Read more...

GBP/USD to retest the flash crash lows?

The UK GBP’s recent ‘short squeeze’ recovery from the flash crash has stalled at an all-important 50 % retracement level. The path of least resistance is now clearly to the downside, and a retest of the flash crash lows touched on the 26th of September is becoming increasingly likely.

Despite the continued efforts of the Bank of England to support the bond markets, yields are still edging up. Yet the currency is taking no comfort. This is a consequence of two main factors. Firstly the markets are not liking what they are seeing from the UK government in terms of policy. They have taken zero confidence from the "trickle-down" approach intended to spur growth enabling a balancing of the books. And possibly more importantly the continued strength of the USD. The Fed has certainly led the way in the rate hiking cycle in their mission to battling rampant inflation. The general belief is that they will continue on their aggressive path. So, in theory, whatever the UK Bank of England will do with their monetary policy it is likely to be cancelled out by the more aggressive moves from the FED. Read more...

GBP/USD to see a decisive break below the 1.10 level – ING

More turmoil in the UK bond market has seen the Bank of England (BoE) step in with another emergency measure, this time to support battered inflation-linked bonds. However, economists at ING expect the GBP/USD pair to slip under the 1.10 mark.

“The BoE delivered another pre-market attempt to calm investors, by announcing it will widen the scope of daily gilt purchase operations, including inflation-linked bonds.”

“We continue to see downside risks for the pound, as levels around 1.10 do not mirror the fragility of the UK bond market.”

“We expect a decisive break below the 1.10 level today or in the coming days, and currently target the 1.00-1.05 area for the pair into year-end.” Read more...