GBP/USD slips below $1.30 for first time since 2020

The pound stumbled on Friday, even passing a key barrier of resistance against the US dollar in the process.

Sterling continues to struggle at the start of this week, with GBP/EUR retreating to €1.1944 and GBP/USD sliding to $1.2991. GBP/CAD is rangebound at C$1.6377, while GBP/AUD and GBP/NZD are holding steady at AU$1.7488 and NZ$1.9030, respectively.

Looking ahead, will a downbeat UK GDP release leave the pound on the back foot through today’s session?

What’s been happening?

The pound closed last week’s session on a sour note. With the GBP/USD exchange rate slipping below a key barrier of resistance.

There didn’t appear to be any clear catalyst for the GBP selloff but some analysts attributed it to easing expectations for the Bank of England’s (BoE) next rate hike.

At the same time, the US dollar was able to push higher on Friday, with the currency rising in tandem with US Treasury yields.

The uptick in yields came on the back of some hawkish commentary from Federal Reserve policymakers earlier in the week, which stoked expectations for a half-percent rate hike from the US central bank next month.

The euro, meanwhile, was undermined by its negative correlation with the US dollar in addition to some political jitters ahead of the first round of the French election.

What’s coming up?

Kicking off this week’s session was the publication of the UK’s latest GDP figures.

Data released by the Office for National Statistics (ONS) reported a larger-than-expected slowing of economic growth in February, which could undermine the pound this morning.

Meanwhile the focus for USD investors will be on speeches by Fed policymakers Raphael Bostic and Michelle Bowman. Should they strike a broadly hawkish tone and reinforce expectations for the next Fed rate hike, then the US dollar may strengthen.

In the meantime, the situation in Ukraine is likely to continue to dictate movement in the euro, with the single currency potentially coming under pressure if peace talks between Ukraine and Russia remain in doubt.