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The Stability of the British Pound Across Major Currencies

The Stability of the British Pound

The stability of the British Pound against major currencies is uncertain. Stay updated on pivotal support and resistance levels.

The British pound experienced a brief boost last week following unexpected growth in the UK economy. However, this upward trend may need to be revised.

In comparison, the US economy has demonstrated remarkable resilience amidst tightening financial conditions, allowing the US Federal Reserve to maintain a hawkish stance. On the contrary, the Eurozone and the UK are grappling with sluggish growth due to elevated interest rates affecting their economies.

Despite the possibility of another UK rate hike this year, interest rate differentials favor the USD. The Bank of England’s decision to keep interest rates unchanged in September and revise its economic growth forecasts for the July-September quarter added to the pound’s challenges.

Assessing the Stability of the British Pound Across Major Currencies

GBP/USD: GBP/USD is falling below the crucial support level of the 200-day moving average, indicating a short-term bearish trend. The next significant support lies at the March low of 1.1600-1.1800. A breach below this range could jeopardize the medium-term recovery. GBP/USD must rise above the early-August high of 1.2820 to reverse the immediate downside risks.

EUR/GBP: Currently testing a pivotal resistance level at the mid-July high of 0.8700, EUR/GBP faces a crucial juncture. A breakthrough could lead to a bullish trajectory, reaching the April high of 0.8875 and nullifying the bearish bias seen since the beginning of the year. The market is encountering further resistance at the early 2023 high of 0.8980.

GBP/AUD: Despite the prevailing downward bias, GBP/AUD is nearing a robust support zone around the July low of 1.8850, slightly above the June low of 1.8500 and in line with the 200-day moving average. Although oversold conditions and constructive signals on higher timeframe charts hint at a potential support hold, the cross must reclaim the early-September high of 1.9750 to shift the momentum from sideways to upward.

In summary, while the UK GDP-led bounce provided temporary relief, the future of the British pound across major currencies remains uncertain. The strength of the USD and economic challenges in the Eurozone and the UK hinder the pound’s sustained growth. Traders should closely monitor key support and resistance levels in GBP/USD, EUR/GBP, and GBP/AUD to make informed decisions amid this volatile market landscape.

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