Sterling holds recent lows, where now?
One of the big market moves over the last 24hrs has been the drop in sterling after the sharpest drop in two months as UK consumer price inflation fell below forecasts.
It is now down at an annual rate of 3.9% in October, its lowest in 24 months. As a result the pound remains under pressure but where are the next levels of support for GBP/USD, GBP/EUR, GBP/AUD, GBP/NZD, GBP/JPY etc?
(AI Video Transcript)
The British pound
The recent drop in the GBP's value can be attributed to a lower than expected rise in consumer prices, which caused the markets to take a hit. However, the pound is still doing relatively well against the USD, despite a noticeable decline in value yesterday. The pound's performance against the dollar is mostly influenced by the dollar's weakness. It is worth noting that the UK's inflation rate is at its lowest point in two years, at 3.9 percent.
The Bank of England
This sets the stage for the possibility of the Bank of England reducing interest rates next year. Many speculate that there will be multiple rate cuts, but it's important to consider how the pound is performing against other currencies, not just the dollar, given the dollar's overall weakening trend.
GBP/EUR
The pound has also faced losses against the euro, dropping below the 200-day moving average, a level not seen since November 28th. If we look at the pound's performance against the EUR the next key support level is at 115.17, which represents a 61.8 percent retracement. Additionally, the pound has also weakened against other currencies, like the Canadian and Australian dollars. If the pound closes below 168.71 against the Canadian dollar, it could experience further decline to levels of 167 and 166. Against the Australian dollar, recent losses have pushed the pound to its lowest point since June 20th. The next important support level for the pound against the Australian dollar is at 187.46. Furthermore, the pound has also weakened against the New Zealand dollar, falling below the support level of 202.75.
The pound's value
In summary, the British pound has seen significant declines in the last 24 hours due to lower than expected inflation. The dollar's weakness has played a part in these movements, impacting the pound's value against major currencies such as the US dollar, euro, Canadian dollar, Australian dollar, and New Zealand dollar. It is crucial to consider how the pound performs against other currencies and pay attention to the respective economies' fundamentals to gain a better understanding of the overall situation.
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