FOMO Friday: Pound Gets Pummelled

GBPUSD Breaks LowerAs we wrap another week (and it’s been a wild and wintery week here in London), it’s time once again to take a look at the action over the week. There’s been plenty to focus on this week, with no shortage of moves across the markets.However, the big focus heading into the weekend is all on the moves we’ve seen across the board in GBP and with USD seeing a firm rally across the week also, it seems the trade capturing the most attention this Friday is the almost 2.5% slide in GBPUSD. So, let’s take a look at what caused the move and, as ever; if you caught this trade? Well-done! If not? There’s always next week.What Caused the Move?It turned out to be the perfect storm for GBPUSD this week with a combination of downside GBP factors and upside USD factors driving the breakdown to the pair’s lowest levels since December 2020.Energy Crisis & Furlough EndingStarting on the GBP front, there has been plenty weighing on the UK currency this week. The escalating energy crisis and supply chain issues impacting the economy have exacerbated investor uncertainty towards the UK. The fuel shortage has been met this week by the UK PM ordering the army to become involved in distributing fuel as more and more petrol stations go empty and energy prices continue to rise as suppliers and distributors falter. This has come at the same time as the government’s furlough scheme comes to an end and universal credit (unemployment support) is due to be cut, raising fears over the near-term economic prospects for the UK.Hawkish Fed Comments Boost USDOn the USD side, the Dollar has been higher this week in response to a slew of hawkish comments from Fed member and safe-haven inflows. An increasing number of policymakers are now voicing their view that tapering is likely to happen soon, a sentiment echoed by Fed chair Powell this week. With this in mind, the greenback has been well bid across the week and looks set to remain in favour next week also. So, let’s take a look at the technical picture now.Technical ViewsGBPUSDThe sell off in GBPUSD has seen the market breaking down out of the contracting triangle pattern and below several key support levels. In the near term, while the market remains below the 1.3570 level, the focus is on a continued push lower towards the deeper 1.32 target, in line with bearish indicator readings.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/fomo-friday-pound-gets-pummelled"
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