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  • The Boris administration insists on holding on to power despite the resignation of key members.
  • Britain’s economic outlook remains bad as the Bank of England warned markets.
  • GBP/USD is pulling back in the charts after a strong move down.

Today’s GBP/USD price analysis is bearish as the pair continues to suffer due to the crisis in Boris Johnson’s government and economic worries. The pound has collapsed to two-year lows brought on by the resignation of key cabinet members leaving Boris Johnson clinging to power.

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Huw Pill, the BoE chief economist, is open to a rate hike higher than the 25bps hike favored by the central bank. At the same time, the Bank of England warned markets about Britain’s economic outlook, which has worsened since the beginning of the year.

GBP/USD is also heading lower due to dollar strength as the safe-haven currency seems to be the balm to investors’ souls in these uncertain times. The dollar is also rallying due to the expectation by markets of aggressive rate hikes by the Federal Reserve.

GBP/USD key events today

GBP/USD investors will listen to two speeches from the Bank of England MPC members Mann and Pill. These speeches are known to have clues and opinions on the following bank policy meetings, including rate hike decisions.

In the United States, initial jobless claims are expected to decrease from 231K to 230K. Investors also expected speeches from Fed and FOMC members later today that will point to the current and future of the Fed’s monetary policy.

GBP/USD technical price analysis: A short pause in the bearish trend

GBP/USD price analysis

The 4-hour chart shows the price in a strong downtrend as it is trading below the 30-SMA. The RSI also points to bearish momentum as it is trading below 50. The price has broken below a critical June 14 support and is currently retesting this level. If the level holds, we might see the price falling further to 1.18504, which was last seen in 2020 on March 26.

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However, if 1.19507 fails to hold back the bulls, the price might rally to the 30-SMA, which is the next resistance level. At the 30-SMA Bears would come back in to take the price below recent lows. The trend will remain bearish until we see the price trading above the 30-SMA and RSI above 50.

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