GBP USD extends losses for fifth consecutive day to hit new four month low

GBP/USD (daily chart shown below) extended its losses on Friday morning to continue its week-long slide. In the process, it has establishing more than a four-month intraday low at 1.5150. From this week’s open around 1.5525, the currency pair is currently trading just under the 1.5200 support handle as of this writing, for a significant 2% drop in the course of just this past week.

Sterling has undoubtedly been one of this week’s major losing currencies, as it has fallen substantially against the dollar, euro, and yen, among other major currencies.

Modestly compounding the GBP/USD decline on Thursday evening was a speech by Fed Chair Janet Yellen, where she expressed her expectations for a Fed rate hike by the end of 2015, as long as inflation and employment remain stable. This helped the dollar to firm late on Thursday, but some of those gains were pared by Friday morning.

From a technical perspective, GBP/USD has indeed hit its initial downside target at the noted 1.5200 support objective after having dropped this week below both its 50-day and 200-day moving averages. With continued signals from the Fed anticipating a probable 2015 rate hike, the currency pair should continue to be pressured, especially as the Bank of England may be considered somewhat more dovish with regard to the UK’s initiation of its own monetary tightening cycle.

If the current downside momentum is sustained below the 1.5200 level, the next major bearish target is at the 1.5000 psychological support level, which has served as both support and resistance since the beginning of the year. Any further downside move could then begin to target the key 1.4800 support objective.

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