Friday’s fiscal plan unveiled by the UK government has scared off investors and as a result the pound is down heavily across the board.
IGTV’s Jeremy Naylor explains that while sterling is off today’s lows, it has suffered breaks of support taking the pound down to levels not seen in decades against a basket of currencies.
GBP/USD in 37-year lows, EUR/GBP 2-year highs and EUR/USD fresh 20-year lows
GBP/USD slid to its 1985 low and EUR/GBP rallied to a 2-year high following the UK’s fiscal stimulus mini budget while EUR/USD slid to fresh 20-year lows amid Italian far right election outcome.
Axel Rudolph | Market Analyst, London | Publication date: Monday 26 September 2022
EUR/USD drops to new 20-year lows as US dollar scales fresh 2-decade high
This year’s slide in EUR/USD has taken it to levels last seen in June 2002 amid the Federal Reserve's (Fed) aggressive monetary tightening policy with market participants expecting another 125-basis point (bp) rate hike over the next couple of meetings, following three consecutive monthly 75bp rate rises which drove the US dollar to two-decade highs. With Italy’s first far right party since Benito Mussolini’s National Fascist Party in the 1920’s on course to win Sunday’s election, the euro is further under pressure.
EUR/USD slid by around 4% since last week to fresh 20-year lows, slightly below key support seen between the June 2000 and January 2001 highs and the September 2002 low at $0.9698 to $0.9593 by dropping close to the $0.955 mark. Below it beckons the September 2001 high at $0.9331.
Minor resistance can be spotted at the June 2000 high at $0.9698 above which lurks more substantial resistance around the 6 September trough at $0.9865.
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