GBP/USD recovers early lost ground to an all-time low, though lacks follow-through.
Bulls struggle to find acceptance above the 38.2% Fibo. level of the monthly downfall.
The GBP/USD pair builds on its solid intraday recovery move from an all-time low and hits a fresh daily peak, around the 1.0930 region during the early North American session. Spot prices, however, retreat a few pips from highs and now seem to have stabilised around the 1.0900 round figure.
Expectations that the Bank of England will step in to stall the recent free-fall in the British pound triggered the initial leg of an intraday short-covering move around the GBP/USD pair. The US dollar, on the other hand, surrenders its early gains to a fresh two-decade high and offers additional support to the major.
From a technical perspective, the GBP/USD pair is seen struggling to find acceptance above the 38.2% Fibonacci retracement level of the steep decline from the monthly peak touched on September 13. Yet, the intraday recovery has been along an ascending channel which has been rising at a fairly robust rate.
Meanwhile, oscillators on the daily chart are still holding deep in the oversold territory and warrant some caution. This makes it prudent to wait for a convincing break below the ascending channel support, currently around the 1.0765-1.0770 region, before positioning for the resumption of the recent depreciating move. Indeed the pair may be in the amidst of an exhaustion move given the recent acceleration to a crecendoing peak of the dominant downtrend, however, this remains a possible scenario and there is still a risk of further weakness before a bottom is found.
The 1.0900 mark now seems to act as an immediate hurdle ahead of the daily swing high, around the 1.0930 region. Any further recovery is likely to confront stiff resistance near the top end of the ascending channel, currently around the 1.0975 zone. This is followed by the 1.1000 mark, which if cleared decisively will suggest that the GBP/USD pair has formed a near-term bottom.
EUR/USD has turned south and declined toward 0.9600 in the second half of the day on Monday. A sharp decline witnessed in the GBP/USD pair and the souring market mood provided a boost to the dollar, lifting the US Dollar Index back above 114.00.
GBP/USD falls below 1.0700 following BoE statement
GBP/USD came under renewed bearish pressure and slumped below 1.0700 during the American trading hours. In a statement published on Monday, the Bank of England said that they welcome the government’s commitment to sustainable economic growth, triggering another GBP selloff.
Gold breaks below $1,640 as US yields surge higher
Following the earlier recovery attempt to the $1,650 area, gold lost its traction and declined below $1,640. The benchmark 10-year US Treasury bond yield is up nearly 3% on the day at around 3.8%, forcing XAU/USD to stay on the backfoot and stretch lower.