GBP/USD slips to 37-year low, EUR/USD to 20-year low while EUR/GBP rallies
EUR/USD and GBP/USD drop while EUR/GBP bounces off support.
EUR/USD drops to 20-year lows post Fed 75-basis point rate hike
EUR/USD’s slide from its mid-September peak at $1.0198 has taken it to levels last seen in October 2002 following the Federal Reserve (Fed) 75-basis point (bp) hike on Wednesday and its hawkish stance leading to expectations of another 125-bp rise over the next couple of meetings.
With the US dollar surging, EUR/USD slid to near 20-year lows with the breached one-month resistance line at $0.9756 representing a possible short-term downside target. Key support sits between the June 2000 and January 2001 highs and the September 2002 low at $0.9698 to $0.9593.
Minor resistance above the 6 September trough at $0.9865 remains to be seen between the late August low at $0.9901 and the 16 September low at $0.9946.
EUR/GBP bounces off minor support ahead of BoE rate decision
Last week’s EUR/GBP rally to above the £0.8722 June and early September peaks as UK retail sales showed their biggest decline so far this year by sinking by 1.6% month-on-month (MoM) compared to a rise of 0.4% in July, has taken the cross to levels last traded in February 2021 at £0.8787 before slipping back to its previous minor resistance, now minor support, at £0.8721 on Wednesday.
From there the cross is currently attempting to recover ahead of Thursday’s anticipated Bank of England (BoE) 50-bp rate hike with perhaps even 75-basis points being seen.
Above last week’s high at £0.8787 lies the £0.8797 early February 2021 high which will remain in sight while the currency pair stays above Wednesday’s low at £0.8712 on a daily chart closing basis. If £0.8712 were to give way, however, the July high at £0.8678 would be back in the picture.
GBP/USD sells off to new 37-year low
Following the Fed’s widely anticipated 75-bp rate hike on Wednesday - taking US interest rates to a 14-year high - and a continued aggressive hawkish stance, GBP/USD sold off to yet another 37-year low on the back of a stronger greenback ahead of Thursday’s BoE meeting and anticipated 50-bp rate increase.
The pound sterling is trading at levels last seen in 1985, but interestingly enough is temporarily holding along its June-to-September support line at $1.1212. Below it lies minor support around the psychological $1.10 mark and much further down major support at the 1985 low at $1.0345.
Any short-term bounce is expected to encounter resistance at the $1.1351 mid-September low in the first instance and then at the 7 September low at $1.1406. While the last reaction high on the daily chart at $1.146 caps, immediate downside pressure is expected to remain in play.
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