That were three critical days for Pound Sterling (£). GBP pairs are affected by the growing conflict between the government and the Bank of England.
On Wednesday, the UK Business Secretary Jacob Rees-Moge accused the Bank of England’s latest interest rate decision (up 50 basis points compared to 75 basis points by the Fed) of the GBP crash in late September. The pound sterling collapsed as the move coincided with the tax-cutting plans by the government.
Critical Days for Pound Sterling: Has an Uptrend Started Already?
GBPUSD has shown some unseen bullish signs since September 28, when it hit an all-time low at $1.033. Since then pound sterling rebounded strongly, hitting almost $1.15 on October 5.
Suppose the Bank of England and the government successfully coordinate their policies and communication with the market. In that case, this may be a turning point, with GBP being relatively underpriced recently.
On Wednesday, GBPUSD crossed the $1.1 resistance in what could end up as a trend reversal. The pound sterling is way below the 100-day and 200-day moving averages.
A Unique Week for GBP
We are in the middle of an emergency buyout of treasury gilts by the Bank of England. The process is expected to end on Friday. So it’s going to be a critical week for the pound sterling.
It may as well happen that the long-term downtrend that accelerated since the beginning of 2022 continues. If the bearish scenario comes to life, then parity for GBPUSD may be tested even this year.
This week is going to be exciting for the pound-sterling pairs. The volatility is through the roof, and the technical analysis would help establish the entry and exit levels. Still, it would help if you chose your trading strategy accordingly to the British macroeconomic and political news.