A weekly chart close above this resistance area on Friday after US non-farm payrolls (NFPs) could point to a significant trend reversal in the US dollar and lead to the Dollar Index heading back up towards its June-to-July lows and 200-day SMA at 103.34-to-103.54.
Additionally, recent data indicating strength in the US job market has reinforced expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. This divergence in monetary policy expectations between the UK and the US is likely to continue influencing the GBP/USD exchange rate in the coming months.
Traders should therefore closely monitor upcoming UK economic data releases and BoE communications for further clues on the central bank’s policy direction.
Impact on other GBP currency pairs
The pound’s weakness is not limited to its performance against the US dollar or the euro. Other major currency pairs have also seen significant movements which traders should be aware of when formulating their trading strategies.
Traders should also remain vigilant and consider implementing appropriate risk management strategies, such as stop-losses, given the current volatile market environment.
How to trade GBP currency pairs
1. Analyse technical and fundamental factors affecting the pound, including BoE policy and global events.
2. Decide whether to trade GBP through spread betting, contract for differences (CFDs), or other instruments.
3. Open an account with IG to access forex markets.
4. Use our advanced charting tools to identify potential entry and exit points.
5. Place your trade, ensuring you have appropriate risk management measures in place.
Remember that forex trading carries a high level of risk, and it’s crucial to understand the markets and use proper risk management techniques before engaging in currency trading.
