GBP/USD drops sharply to 1.2460 as risk-off intensifies

The GBP/USD pair witnessed aggressively selling in the European session, after the bulls once again ran into key resistance lined up near 1.2500 levels, knocking-off the rate to the fresh daily lows near 1.2460 region.

The latest leg down in the spot can be mainly attributed to renewed risk-aversion wave that gripped Europe, sending the London stocks lower and hence, curb the appetite for the risk currency GBP.

Moreover, the recovery mode seen in the US dollar versus its main peers combined with dovish BOE policymaker Vlieghe’s remarks, added to the renewed weakness seen around cable.

BOE Vlieghe played down expectations of a BOE rate hike in the near future, noting that faster inflation doesn’t alone mean rate hike.

Also, the major remains unnerved ahead of the EU Tusk-UK PM May meeting and also before the Trump-Xi Summit, which will drive market sentiment amid a data-light NA calendar.

GBP/USD Levels to consider            

Franco Shao at ForexCycle.com notes, “Key support is at 1.2418, a breakdown below this level will confirm that the uptrend from 1.2109 had completed at 1.2615 already, then the following downward movement could bring price to 1.2200 area. Key resistance is at 1.2557, a break of this level will indicate that the uptrend from 1.2109 has resumed, then next target would be at 1.2650 area.”