The British Pound has hit a new 2022 low against the US Dollar after investors opted out of risky assets in response to Wednesday’s statement from the US Federal Reserve, which leaned towards a start of rate hikes in March 2022. Higher interest rates in the US, coupled with a flight to safety in response to ongoing tensions between Russia and Ukraine are considered USD-positive events.
Also pressurizing the Pound was the announcement by the UK Met Police that it was investigating the UK Prime Minister over parties that were held at 10 Downing Street during the lockdowns. The report by UK Cabinet Official Sue Gray following an investigation into the parties is due to the released soon.
The GBP/USD is currently trading 0.6% lower as of writing.
The decline on the daily candle has violated the 1.34138 support level and looks set to challenge the 1.33638 support target. If the new support is breached, the bears would have a clear pathway towards 1.32737 (2 December low and 21 December high). Below this level, 1.31787 forms another viable pivot.
On the flip side, a bounce on the 1.33638 support retests 1.34138, with 1.34954 and 1.36117 forming additional northbound targets. Only a breach of 1.37298 restores the short-term bullish sentiment on the pair.