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Friday, January 27, 2023

GBPUSD Extends Slide to 1.1760 After US Data and UK Budget

  • The pound is one of the worst performing currencies in the G10 following the autumn budget.
  • The dollar remains strong despite mixed US economic data.
  • GBPUSD pared its weekly gains on Thursday and moved away from three-month highs.

couple GBPUSD It continued to fall during the US session and hit as low as 1.1760. It then reduced losses by rallying towards 1.1800. It broke more than 100 points on Thursday after US data and UK budget presentation.

Pound falls after autumn budget

In the UK on Thursday, Chancellor of the Exchequer Jeremy Hunt presented the Autumn Statement, Prime Minister Rishi Sunak’s budget. The budget was largely in line with analysts’ expectations. Hunt presented a £55 billion tax hike and spending cuts aimed at restoring the UK’s financial reputation after the chaotic September and October.

The WSJ reported, “The UK government announced the biggest tax hike and spending cuts in a decade, becoming the first major Western economy to sharply limit its spending growth following the pandemic and years of recent government subsidies. ” During the presentation the pound touched a new daily low but fell at a moderate pace.

Dollar continues to strengthen after US data.

US economic data showed an unexpected drop from -8.7 at the Philadelphia Fed to -19.4 in November. Continuing jobless claims rose to the highest level since April. Home starts and building permits fell less than expected. The dollar initially dipped after the report pared gains, but minutes later it resumed its bullish path, hitting new all-time highs.

DXY is around 107.00, up 0.69% on the day. Yields are higher in the US, with the 10-year yield trading at 3.79% and the 2-year Treasury yield trading at 4.44%.

GBPUSD limited to upside while below 1.1950

For the third day in a row, GBPUSD failed to hold above 1.1950 and fell back. The pound needs a daily close that could open the door for a recovery to 1.20 and higher. The next important target is the 200-day SMA at 1.2240.

If the ongoing correction continues, the area around 1.1740 is shaping up as a strong support which could favor upside. The next support is at 1.1640. A downside break will target the 20-day SMA at 1.1560.

technical level

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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