The GBP/USD price crashed to the lowest level in more than three decades amid concerns about the UK economy and an extremely strong US dollar.
UK economy concerns
The UK economy is going through a challenging period as it moves away from the pandemic. Data published on Friday showed that retail sales dropped sharply in August of this year. According to the Office of National Statistics , the total retail sales fell by 1.6% in August, which was higher than the median estimate of a modest fall of 0.6%.
Retail sales have been affected by substantially weak wage growth and elevated levels. Data published on Wednesday showed that inflation eased slightly in August as government energy subsidies helped offset the situation.The next key catalyst for the GBP/USD pair will be the upcoming interest rate decision by the Bank of England that is scheduled for Thursday this week. Analysts expect that the bank will decide to hike interest rates by either 0.50% or 0.
This week, the Fed will also conclude its meeting on Thursday. Some analysts believe that the bank will deliver a jumbo interest rate hike of 1% for the first time in decades. Other analysts expect that it will hike by either 0.50% or 0.75%. It has already hiked by 225 basis points this year and reduced the size of its balance sheet.On the four-hour chart, the pair managed to drop below the importantat 1.1408, which was the lowest level this year. It has moved below all moving averages.
The pair will likely continue falling ahead of the upcoming Fed decision. If this happens, the next reference level will be the psychological level at 1.1300.
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