GBP/USD drops further… 1.2200 closer ahead of Yellen

The British Pound is now accelerating the downside vs. the greenback, sending GBP/USD to test fresh lows in the 1.2220 area.

GBP/USD weaker post-data, eyes on Yellen

The pair met extra downside pressure on Friday following disappointing results from February’s Services PMI (53.3 act. vs. 54.1 exp.), while the continuation of the bullish note around the buck keeps weighing on sentiment despite today’s squeeze lower.

In fact, rising bets on a Fed’s move later in the month keep sustaining the upbeat mood around USD. According to agency Thompson/Reuters, the probability of a 25 bp rate hike on March 15 is currently at 76.4%, more than doubling previous days’ readings.

The broader picture around GBP has deteriorated somewhat as of late, as Brexit jitters have resurfaced after the House of Lords voted to amend the Brexit bill, while UK’s indicators showed some signs of deceleration in recent weeks. Additionally today, GBP is deriving extra weakness in response to the strong upside in EUR/GBP. The single currency found extra legs after French election polls showed candidate E.Macron leading with 27% of vote intention.

Later today, the focus of attention will be on the speech on ‘Economic Outlook’ by Chief J.Yellen. In addition, US ISM Non-manufacturing is due along with speeches by Chicago Fed C.Evans (voter, dovish), Richmond Fed J.Lacker (2018 voter, hawkish), J.Powell (permanent voter, centrist) and Vice Chairman S.Fischer (permanent voter, centrist).

GBP/USD levels to consider

As of writing the pair is losing 0.30% at 1.2229 and a break below 1.2197 (low Dec.28 2016) would aim for 1.2036 (low Jan.11) and finally 1.1979 (2017 low Jan.16). On the flip side, the initial up barrier aligns at 1.2308 (high Mar.2) followed by 1.2390 (55-day sma) and then 1.2410 (100-day sma).