GBP/USD Further Weakens Under 1.1800 as USD Strengthens

The GBP/USD currency pair has, once again, come under fresh selling pressure in the early hours of Friday as it prolonged its drawback overnight. The asset fell off its recent weekly high level. 

Steady Descent Around the Pair

Spots prices have lost their position all through the course of the European session early on Friday. The pair slid further beneath the 1.1800 line and hit a new daily low level a few hours ago.

GBP/USD price chart. Source TradingView

The stable descent that the GBP/USD pair is going through is dominantly promoted by the coming of new purchasing activities in the vicinity of the US Dollar. This, in turn, is boosted by the hawkish position of the US Federal Reserve as a means of fighting inflation.

The latest hawkish comments from officials of the Federal Reserve confirmed the expectations of the market for more monetary policy tightening from the US Federal Reserve. As a matter of fact, the market has priced in a higher possibility of the Feds implementing a 75 basis points interest rate increment during the Fed’s meeting in September.

In Britain, on the other hand, the Pound is being undermined by the close possibility of an impending recession. The country is also still battling with high energy costs and the pressing rise of inflation.

The BOE Predictions

The Bank of England made a prediction at the beginning of this month that the UK’s economy will jump into a long recession. The bank put the beginning of the recession at Q4 of 2022 and said the country might see a huge inflationary shock.

Aside from the already stated conditions, any prolonged weakness under the 1.1800 benchmark seems to be what escalated the bearish weight pressing down the GBP/USD currency pair. There is a bearish death formed on the pair’s weekly chart but it is after the simple moving average of the 50-week watch. It crossed under the dropping 20-week simple moving average after having a bearish close last week.

In addition to that, it is possible that a bearish pattern has been created on the daily chart. It would bring about a fall to about 1.15. If it gets confirmed through a break on the downside then a high momentum, as well as its selling pressure.

The follow-up drop in the direction of retesting the year-to-date low level that is close to 1.1720 and 1.1715 levels reached the beginning of the week.