Yesterday, the GBP/USD market experienced a day of intense volatility due to a number of news items. According to Trading Economics:

→ UK retail sales were flat last month after a strong rise of 3.6% in January, contrasting with market expectations of a 0.3% decline.

→ The Bank of England decided to leave interest rates unchanged. However, its head Andrew Bailey hinted at a potential reduction in interest rates. He noted positive indicators of lower inflation but stressed the need for greater confidence in managing price pressures.

Thus, a clearer prospect of easing monetary policy in the UK (which, however, is relevant for many countries) has become a driver for the weakening of the British pound.

The GBP/USD chart today shows that:
→ The price fell below USD 1.26, forming a March low;
→ The USD 1.28 level looks like an important resistance — at the beginning of the year a head-and-shoulders pattern formed there, after which in March there was an unsuccessful bullish breakout of this formation and a test of the USD 1.28 level.
→ The contours of the downward channel become more obvious on the chart (shown in red).

The rate of decline from yesterday's high is very fast. If the momentum continues, it is possible that the bears will be able to lower the price of GBP/USD to the lower border of the red channel. An obstacle for them may be the support of USD 1.2525, near which the GBP/USD price has repeatedly formed bullish reversals.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.