The GBPUSD extended its plunge by -0.20% early Friday morning after a massive selloff on Thursday. The pair made a fresh 2-year low at 1.2280 despite the BoE raising rates by 25bps to their highest in 13 years.
The US dollar continues to pin down a weak Pound after the aggressive rate hike by the Fed. The Fed raised its rates by 50bps to 1% on Wednesday, the highest since 2000. The EU sanction plan to sanction Russian oil risks an economic recession in the UK as BoE continues to battle rising inflation.
Traders shift their focus to the US jobs report as a critical tell-tale sign in justifying the aggressive monetary tightening by the Fed. A lineup of Fed speakers is scheduled to speak in the New York session.
FOMC members James Bullard, William and Daly will be addressing inflationary concerns in the US. BoE also has its lineup of members including MPC members Pill and Tenryro later in the New York session.
The GBPUSD extended a further drop below 1.2682 as the pair faces renewed selling pressure. The pair is currently bearish from a technical perspective as indicated by the Williams alligator. The moving averages are used as dynamic resistance and support.
Bears maintain their targets at 1.2100 if they manage to break below the 1.2200 near-term barrier. The RSI indicator reading is not yet extremely oversold hence buyers may seek a lower bottom.
However a break above 1.3000 will be necessary to change the direction of GBPUSD to bullish in the near-term. Upside gains are capped by 1.26822 previous support turned resistance.
The ActivTrader Sentiment tool shows an increasing buying sentiment by retail traders in the near term. This increasing bullishness may indicate the GBPUSD has not bottomed yet and the outlook remains bearish unless the price breaks above the 1.2682 previous support turned resistance.
The GBPUSD recovered losses after sweeping below 1.2300 psychological support during the European session. A price breakout from the weekly range, below the 1.2400 on Thursday reinforced selling pressure on the pair and bears could target below 1.2300 in the near term.
This can be confirmed by the Bollinger Band indicator showing an expansion of the outer bands indicating increasing selling pressure in the near term.
However, the pair has a near-term barrier to the upside at 1.2470 which coincides with the Bollinger Band Baseline (orange). A break above that area may change the outlook to bullish in the near term. The Stochastic Oscillator reading below 25 shows signs that the pair may be subject to sharp price retracements in the short-term.