GBP – Dollar Slips Amid Criminal Investigation Against Powell

The dollar fell significantly on Monday, ending a four-day winning streak from last week, while gold prices surged to a record high as global financial markets remained volatile. On one hand, geopolitical risks continued to escalate; US President Trump stated that Iran had requested negotiations and that the U.S. was arranging talks with Iranian representatives, but the U.S. government might need to take action against Iran before the meeting. Previously, the most shocking development on Monday was undoubtedly the U.S. Department of Justice's investigation into Federal Reserve Chairman Jerome Powell, focusing on the approximately $2.5 billion renovation project of the Fed's historic headquarters. However, Powell clearly stated that the core issue was not the project itself or budget details, but rather attempts by outsiders to interfere with the central bank's ability to set interest rate policies based on economic evidence through legal means. The market interpreted this as a threat to the independence of the Fed's monetary policy, which could shake investors' core belief in the stability of the US system. The next market focus will be on Tuesday's release of the December US Consumer Price Index (CPI).

The GBP/USD exchange rate, as seen on the technical chart, has been rising within an upward channel since November of last year, currently bottoming out at 1.3450, which is also near the 25-day moving average. As long as it doesn't break below these two areas, the pound is expected to maintain its upward trend. The upper limit of the channel is at 1.37, which could be a short-term target. Nearest resistance is expected at 1.3570, followed by stronger resistance at the September 17th high of 1.3726 to 1.38. The medium-term focus is on the 1.40 level. The support is expected at 1.34, with stronger support at 1.33 to 1.32.

Forecast range:
Resistance 1.3570 - 1.3700/26 – 1.3800 – 1.4000
Support 1.3450 – 1.3400 – 1.3300 – 1.3200

This Week's News Highlights:
December 1st
UK December BRC Overall Retail Sales YoY +1.20%
UK December BRC Same-Store Retail Sales YoY +1.00%

Key Focus:
Thursday
UK November Industrial Production‧Manufacturing Production (15:00)
UK November Trade Balance (15:00)

Any questions? contact our professional analysis team