The greenback extends gains across the board on Thursday, with the GBPUSD pair failed to hold above the key 1.30 level, sliding down to fresh 10-month lows in the 1.2980 area. Sterling has been declining for a third day in a row, extending losses for a fourth month already.
The key reason behind the pair’s bearishness is the dollar demand which resurged strongly after positive Rowell’s comments this week as the Fed Governor confirmed that the central bank will proceed with gradual policy tightening, citing healthy economic fundamentals. Moreover, the buck is also supported by the lingering trade-war worries.
The additional pressure on the pound came from the dismal UK economic numbers. The wages, CPI and retail sales data have disappointed this week and raised concerns about the BoE rate hike in August. The situation is compounded by the fact that the threat of a “chaotic” no-deal Brexit. As such, the pair looks poised for further losses in the short term unless the central bank officials reassure markets on rate hike. So far, the pound could drop to 1.29, before buyers reemerge.
By Helen Rush
Senior Analyst at Capital Markets