Gbpusd Ends The Week On A Bearish Note

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Gbpusd Ends The Week On A Bearish Note

GBP/USD Ends The Week Below 1.2200

GBP/USD pair closed the week below the 1.2200 level as the bearish trend continued to intensify even during the last trading day.

For the Bank of England (BoE), one of the major problems is inflation, which means they have little choice when it comes to lowering the high-interest rates in the country. In simple words, inflation continues to remain a big enough threat for the BoE to sustain the high-interest rates in the UK.

Despite all of these measures, the prices remain higher than the target set by the BoE. This means that the dream of rate cuts is now even more distant than it was ever before! For UK firms, the costs of funding and borrowing will also remain high, which will depress the economy.

UK Manufacturing Sector Remains Weak

Similarly, the labor conditions in the UK are also deteriorating while the pessimistic outlook dominates the manufacturing sector. So that's yet another reason that can make it troubling for the BoE to keep the interest rates at high levels.

Looking ahead, we have the UK's PMI, which is expected to show that the economic metrics have further deteriorated. If this turns out based on expectations, it will mean more downside for the GBP/USD pair.

On the contrary, the US Dollar is expected to attract buying pressure next week. In addition, the issue of government shutdown is also sorted, which will prove to be US Dollar bullish as well. Similarly, the fears of delay in the NFP report have also disappeared after the action taken by the US representatives.

The GBP/USD technical analysis reveals that the Pound (GBP) retreated after touching the 200 SMA (hourly). In this attempt, the GBP touched 1.2270 (daily high) on Friday and then received a rejection from the SMA line.

For now, it looks like the 34 EMA (hourly) is keeping a cap on any GBP/USD advance, which tells us that the break of this line will be important for any sustained bullish momentum. So, any break of the 34 EMA will indicate that the bearish pressure in the GBP/USD has disappeared.

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