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GBP/USD hovers near 6-yr lows, around 1.4150

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 20, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - The GBP/USD pair halted its downward spiral just ahead of multi-year lows and moved slightly from there, to now consolidate around 1.4150 amid persisting global risk-off.

    GBP/USD finds fresh bids at 1.4135

    The GBP/USD pair trades 0.07% lower at 1.4150, having tested six-year lows at 1.4127. The major is seen consolidating the downside before the next leg lower, as the ongoing risk-off trades and dwindling BOE rate hike chances this year keeps the GBP suppressed across the board.

    A better UK CPI print was completely outweighed by dovish BOE Carney’s comments, which triggered a fresh sell-off in GBP/USD. Moreover, the losses accelerated after the cable breached the key support at 1.4230 (May 2010 levels), pushing the pair 100 pips further down to the lowest levels since March 2009 at 1.4127.

    BOE Governor Mark Carney noted in his speech, "Well the year has turned, and, in my view, the decision proved straightforward: now is not the time to raise interest rates."

    In the day ahead, the UK jobs report may provide the much-need respite to the GBP bulls, however, any recovery is likely to remain short-lived amid falling oil prices and wide-spread risk-aversion.

    GBP/USD Levels to consider

    The pair has an immediate resistance at 1.4180/84 (daily high/ 1h 20-SMA), above which 1.4220/30 (5-DMA/ psychological levels) would be tested. On the flip side, support is seen at 1.4127 (Jan 19 Low) below which it could extend losses to towards 1.4100/ 1.4080 (March 2009 Levels).
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