Pound is Plunging on the News

The Pound Sterling continues to fall against the USD; now it has already fallen to 1.1660.

Apart from the strong USD factor, the Pound is significantly pressured by domestic news. The UK’s energy regulator announced on Friday that energy bills for UK households will rise by 80% in October. In response to this, the HM Treasury said that it is fully working on developing new options to support households and relax cost charges from energy prices. However, all these words did not help the Pound at all.

The bearish pressure on the Pound is currently too strong to expect a quick and miraculous recovery.

Systemic issues within the British economy could seriously escalate in the near future due to the energy crisis, making the national currency much cheaper.

As we can see in the H4 chart, after finishing the corrective structure at 1.1900 and returning from this level, GBP / USD forms a new descending structure to 1.1600. Later, the market may start another correction to reach 1.1750 and then resume trading down with the target at 1.1550. From the technical point of view, this scenario is confirmed by the MACD Oscillator: its signal line moves below 0 and may continue to fall to reach new lows soon.

In the H1 chart, after completing the correction at 1.1900, breaking the correction channel at 1.1744, and then forming a new consolidation range there, GBP/USD broke it down and may continue to fall to 1.1600. Later, the market may correct to test 1.1744 from below and then resume trading down with the target at 1.1550. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: its signal line moves below 20. In the future, it can grow to bounce from 50 and start falling again to return to 20.