The Pound continues to falter in Thursday’s trading session, as speculations concerning the possibility of the Bank of England dropping interest rates into negative territory.
Despite the post-Brexit trade deal being secured, the UK economy is facing significant headwinds in 2021. A spike in the number of coronavirus cases caused by a mutant strain has forced a national lockdown that could last till March, according to a senior government official. With the Pound shedding some of the weight it gained at the end of 2020 this week, traders are now raising bets that the Bank of England may be forced into taking rates into sub-zero levels to counter the economic impact of the new lockdown.
The GBP/USD is currently trading 0.01% lower at 1.36056 as at the time of writing.
Technical Levels to Watch
Price may be off intraday lows, but this move has put the lower boundary of the rising wedge at risk. With the upside bounce being resisted at 1.36117, it may be a matter of time before the lower edge gives way. If this is the case, this breakdown move could target 1.34765 initially. The measured move from this break could extend towards 1.32663. This means that the price has to take out 1.33951 and 1.33193 to attain the projected target.
Only a break above 1.37025 invalidates the bearish expectation by invalidating the pattern and establishing a new high. This move may then target 1.37916 in the future, if momentum rises.
GBPUSD Daily Chart