British Pound Technical Analysis: GBP/USD, GBP/JPY, EUR/GBP

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BRITISH POUND TALKING POINTS:

• GBP/USD was in a difficult spot earlier in September and the problem has continued to devolve.
• It’s a negative feedback type situation around the UK and the British Pound with a collapsing currency leading to surging bond yields which led to a BoE intervention effort that’s led to more currency collapse. It’s a painful feedback loop that hasn’t yet stopped.
• Is there hope on the horizon? And is this a problem that will be relegated to the UK, as it has similar hues to problems being seen in Europe and the United States.
• The current backdrop is messy as bonds and FX are screaming panic and meanwhile, US equities look relatively calm. I discussed this at-length in yesterday’s webinar.

The British Pound collapsed last week, or so we thought, only to open our platforms this week to see what a collapse in a major currency actually looked like. GBP/USD has set a fresh all-time-low and perhaps more disturbingly, in the days since, price hasn’t really rebounded much. Sellers are still hitting the pair and now there’s other dislocations that are taking place.

 

The UK is faced with a similar problem as Europe and the US with extreme inflation. All three Central Banks were rather calm as inflation built through much of last year but this year, as inflation continued to run-higher even after initial tightening efforts, worry started to show given that central bank efforts were not only unsuccessful but also appearing to bring on even more problems.

Full article and technical analysis: Sep 28, 2022 | James Stanley, Senior Strategist | DailyFX