GBP/USD Is Trading Towards The Daily Low Of 1.3225-20
The Pound is holding below 1.3250 against the Dollar, weighed down by rising concerns over the Omicron COVID strain in the United Kingdom.
As a result of the widespread recovery in the US Dollar and yields, the pair’s value has declined. Reduced bets on the Bank of England raising interest rates might put a stop to any recovery ahead of the central bank’s spectacle.
Keep An Eye On The Technical Levels
GBP/USD CHART Source: Tradingview.com
The Pound is currently trading below the 50-period simple moving average (SMA) on the four-hour chart. According to the chart, the Relative Strength Index (RSI) indication has fallen below 50, indicating that buyers have lost interest in the Sterling for the time being.
On the negative, the 20-period simple moving average (SMA) is aligned as an initial backing before the 1.3200/1.3190 region (stationary level, psychological level). Suppose a four-hour candle falls below the latter. In that case, the duo will likely continue its decline toward 1.3160 (December 8 low) and below.
The resistance levels are 1.3250 (50-period simple moving average), 1.3280 (static level), and 1.3300 (50-period SMA) (psychological level, 100-period SMA).
An Overview Of The Fundamentals
With the latest coronavirus news out of the United Kingdom pushing on the British Pound, the GBP/USD has struggled to maintain its positive momentum on Monday after climbing near 1.3300 before the weekend.
Suppose buyers cannot hold on to the support region that appears to have developed around 1.3200. In that case, the pair is likely to continue its downward trend in the near term.
On Sunday, British Prime Minister Boris Johnson cautioned that two doses of the Omicron vaccination would not be enough to protect the country from the “tidal wave” of the virus sweeping across the country.
In addition, the United Kingdom has elevated the COVID danger to “Level 4,” which is one level below the maximum.
Similarly, Health Secretary Sajid Javid stated that the Omicron variety was growing at a “tremendous pace” in England but added that no Omicron-related deaths had been recorded yet.
Investors are considering the influence of the Omicron variation on the Bank of England’s (BoE) policy choices (which will be disclosed later in the week) may find it difficult to restore their interest in the Pound/Dollar pair.
As seen by the 0.25% advance in the US Dollar Index, the broad-based Dollar surge puts more pressure on the pair. There will be no high-level data releases scheduled for the US economic calendar this week. The conclusions of the Financial Policy Committee meeting will be published by the Bank of England later in the day.