1. Home
  2. Live Market Analysis
  3. GBP/USD - Can anybody stop the US Dollar?
GBP/USD - Can anybody stop the US Dollar?

The GBP/USD is being influenced by developments both in the UK and US. The exchange rate has witnessed significant declines and surpassed the previous support level which has held the price above since the COVID-19 outbreak in February 2020.

The price of the GBP/USD today has declined by 1.77% over the past 24 hours but has also declined for 2 consecutive weeks. Currently, the price is moving within the fourth price swing which has crossed onto a lower low and has formed a lower high. Additionally, technical indicators show a potential continuation of the downward trend. However, certain oscillators such as the RSI also indicate a potential retracement in the near future.

06.07.2022 - 2.png

Starting with the UK and the British Pound, we can see that the price is being pressured by economic, political and confidence factors. Firstly, the Bank of England recently advised that their analysis confirms that the pressure on households has increased and shows signs of increasing due to the worsening global conditions. Economists are mainly concerned with the inflation rate, specifically price increases in food and energy products.

The Bank of England also advised that the lack of investor and business confidence is also a significant issue noting the need to build a buffer capital to provide liquidity. The UK also released some minor economic figures including the Service PMI which was 54.3 points in June, up from 53.4 points last month, while the composite index rose to 53.7 points from 53.1 points earlier.

The US Dollar on other hand is also a major driving factor causing the exchange rate to decline. The US Dollar is increasing in value across most currencies and the US Dollar Index has increased in value reaching 106.56 which is the highest the index has reached since January 2002.

One of the main driving factors is the increasing interest rates which are also predicted to increase in magnitude and frequency. Currently, the market is waiting for the release of the Federal Reserve Meeting Minutes which will confirm what had been said in the latest discussions between the US’s top bankers. Mainly traders are eager to see if the report will indicate whether the Fed will increase interest rates by 50 or 75 basis points. According to most economists, the size of the hike will most likely depend on this month's inflation figures.

Chief Investment Manager, Mr David Riley, has advised that the Federal Reserve is likely to keep increasing interest rates until the Federal Fund Rate increases to at least 4%. Many other economists have also advised that the interest rate is likely to continue increasing to between 3.5% and 4.2%. This has significantly supported the price of the US Dollar in addition to safe-haven elements associated with the currency.

Traders over the remainder of the US trading session will mainly be concentrating on the Fed Meeting Minutes, Jolts Job Opening and the Latest PMI figure. Within regards to the UK, investors will mainly be concentrating on the political side as markets look to get further clarity on the Prime Minister's position.

IMPORTANT NOTICE: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.
RISK WARNING: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail client investors lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Copyright © 2022 – All rights reserved.

NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.

Any trademarks appearing on this website are the property of their respective owners.

The NAGA Group AG is the holding company of various companies, such as NAGA GLOBAL LLC, NAGA MARKETS EUROPE LTD, NAGA Technology GmbH, NAGA Pay GmbH and has a close link with NAGAX Europe OÜ.

RISK WARNING: Derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail investor accounts lose money when trading derivatives with this provider. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.

Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.

Restricted countries: NAGA Group AG does not provide services for the residents of certain countries, such as Afghanistan, Albania, American Samoa, Australia, Barbados, Belgium, British Virgin Islands, Burkina Faso, Cambodia, Canada (including Quebec), Cayman Islands, Central African Republic, Congo, Democratic People's Republic of Korea, Democratic Republic of the Congo, Gibraltar, Guam, Haiti, Iran, Iraq, Isle of Man, Israel, Jamaica, Jordan, Libyan Arab Jamahiriya, Mali, Monaco, Morocco, Myanmar, Nicaragua, Philippines, Russian Federation, San Marino, Senegal, Serbia, Somalia, South Sudan, Sri Lanka, Syrian Arab Republic, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, United Kingdom, US Minor Islands, US Virgin Islands, USA, Vanuatu, Yemen, Zimbabwe.

Member of NAGA Group AG that is publicly listed in Frankfurt Stock Exchange.
close icon
By using this website, you agree to our cookie policy