The British Pound (GBP) has been trading at a new low against the US Dollar (USD) since January 6, according to economists at Scotiabank. This is a cause for concern as the GBP/USD exchange rate is vulnerable to further losses.
The economists at Scotiabank have warned that a break below 1.1845 could trigger a double top at 1.2450 and signal the potential for a sizeable move lower in the next one to three months. This could result in the GBP/USD exchange rate falling towards 1.12.
The trend signals for the GBP are bearish across short, medium and longer run oscillators. This means that any minor rebounds should be sold.
The current situation is worrying for the British Pound, as the exchange rate has been falling since late December 2020. This is due to a combination of factors, such as the UK’s slow vaccine rollout, Brexit-related uncertainty and the US dollar’s strength.
The UK’s slow vaccine rollout has been a major factor in the recent decline of the GBP. The UK government had initially promised to vaccinate 15 million people by mid-February, but only 8.9 million had been vaccinated by the end of February. This has caused a great deal of uncertainty, as the UK is now behind its original target and the timeline for the full rollout is unclear.
Brexit-related uncertainty has also been weighing on the GBP. The UK and EU are currently in the process of negotiating their post-Brexit trade relationship, and the outcome of these negotiations is uncertain. This has caused a great deal of uncertainty in the markets, which has been reflected in the GBP’s performance.
Finally, the US dollar’s strength has also been a factor in the GBP’s decline. The US dollar has been strengthening since late 2020, as investors have been buying the US dollar as a safe haven asset during the pandemic. This has caused the US dollar to appreciate against the GBP, resulting in a weaker GBP/USD exchange rate.
Overall, the current situation is concerning for the British Pound. The GBP/USD exchange rate is vulnerable to more losses, and any minor rebounds should be sold according to economists at Scotiabank. The UK’s slow vaccine rollout, Brexit-related uncertainty and the US dollar’s strength are all contributing to the GBP’s decline, and it is unclear how long this situation will last. Therefore, it is important for investors to remain vigilant and keep an eye on the GBP/USD exchange rate.