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Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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GBP USD revisits 2-year low as fears of recession dominate

GBP/USD had seen its lowest point on Monday during the Asian session, revisiting its two-year low at 1.22930. The bears found more reason to short the pair last week after the Bank of England warned about risks of economic recession if interest rates embarked rapidly. Hence, GBPUSD lost almost 2% of its value on Thursday after this announcement. The downward trend, no doubt, has continued into the new week. After the recent interest rate hike last week, the US dollar seems to trump above every other foreign currency.

Similarly, the decline in pounds is due to many other negative factors, especially the increasing concerns over Brexit. Especially given Sinn Fein’s victory in the Northern Ireland (NI) elections. 

Sinn Fein’s status as the biggest party in Northern Ireland has renewed fears of Ireland’s reunification with Europe. The UK Minister Lizz Truss had warned the party to dump the Brexit deal if it didn’t change Northern Ireland’s protocol. Decisions on Brexit will be revealed this week by prime minister Boris Johnson. He will be giving a speech on Tuesday - wherein he is to deliver a lecture on the “super seven” details of Brexit Bills. 

Moreover, the expectations of the release of UK Q1 GDP this week have heightened tension among investors who preferred a low-risk mood of selling off ahead of the release.

Above all, there are greater expectations that the BoE will have to pause its monetary tightening for a short period, given the rapid increase in the cost of living.

We expect the bulls to defend the pair GBPUSD, having attained its lowest support in two years at 1.22990 during the Asian session today. The next resistance to watch out for is at 1.23590.

Last Updated: 09/05/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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