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The Pound-to-Dollar exchange rate is under fresh pressure on Tuesday, July 09 with analysts saying the move below 1.25 opens the door to fresh losses owing to a lack of support in the market we are told.
The exchange rate is quoted at 1.2484 at the time of writing, the lowest level recorded since a brief flash-crash hit the wider currency market in early January.
In effect, these are fresh 2019 lows and match lows last seen in April 2019.
"Prices remain under pressure, helped by the backdrop of broader USD strength. As such, we are re-testing the medium-term range lows. A recovery back through 1.2560-1.2610 resistance is needed to alleviate the immediate pressure and suggests further range trading," says Robin Wilkin, a cross-asset strategist with Lloyds Bank.
The Dollar is one of the better-performing major currencies on the day and could arguably be cited as being the driver of the current move, however persistent weakness in Sterling remains an enduring feature of this summer's currency market.
The Dollar has seen improved fortunes since U.S. employment data was released last Friday that suggests there is little reason to be pessimistic on the U.S. economy.
The rally in the Dollar comes ahead of a key appearance by U.S. Federal Reserve Chairman Jerome Powell before Congress on Wednesday; markets are expecting his words to be more 'hawkish' than of late.
"Market pricing still looks confidently for a 25bp cut at the end of the month but short-term positioning suggests a bias to look for a slightly less dovish take from Mr Powell," says Kit Juckes, a foreign exchange strategist with Société Générale in London.
The Dollar had been on the backfoot over recent weeks on the assumption that slowing economic growth rates in the U.S., - combined with pressure from U.S. President Donalt Trump that interest rates go lower to support the economy - would see the Fed cut interest rates.
The market now expects two interest rate cuts in 2019.
However, strong U.S. labour market data out last Friday showed an economy that was still in strong shape, begging the question why interest rate cuts would be warrranted.
"The market still expects the Fed to cut rates later this month. But given signs of economic resilience, scope for Fed easing may be more shallow and short-lived than previously expected," says Joe Manimbo, a foreign exchange analyst with Western Union in an assessment of the Dollar's recent strong performance.
The moves mean the Pound enters its seventh day of losses against the Dollar.
Peter Stoneham, an options analyst with Reuters says the January flash crash low at 1.2409 is now in sight for GBP/USD.
"With little support below, the market might exploit a thinning daily chart," says Stoneham.
Any pullback in GBP/USD "is likely limited to 1.2500-10 or 1.2540 at most," says Stoneham, "selling into strength favoured for an eventual drop under 1.2400."
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