The GBP/USD pair continues to face selling pressure for the second consecutive day, reaching a two-week low during the Asian session on Wednesday. This negative trend is driven by a combination of factors that support the US Dollar (USD) and pose challenges for the British Pound (GBP).
The USD Index (DXY) has climbed to a two-week high due to an increase in US Treasury bond yields, leading to a stronger dollar. Additionally, a softer risk tone in the market is boosting the safe-haven appeal of the USD. However, expectations of a rate cut by the Federal Reserve in September are limiting the dollar’s gains. On the other hand, the Bank of England (BoE) is less likely to cut rates in August, which could support the GBP in the near term.
From a technical standpoint, the GBP/USD pair is currently trading near key support levels, with potential for further downside if these levels are breached. However, a break above resistance levels could signal a shift in momentum towards bullish territory.
Analysis and Breakdown:
The GBP/USD pair is facing selling pressure due to USD strength and market risk aversion. The USD’s rise is supported by higher Treasury bond yields and a safe-haven appeal, while the GBP is benefiting from reduced rate cut expectations by the BoE. From a technical perspective, the pair is at a critical juncture, with key support and resistance levels to watch. Traders should be cautious and monitor price action closely for potential trading opportunities.