#GBPUSD @ 1.09877 The pound dives below 1.1000 on the back of BoE Bailey’s comments. (Pivot Orderbook analysis)

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• The pound dives below 1.1000 on the back of BoE Bailey’s comments.
• Unprecedented volatility in the long end of the gilt market.
• GBP/USD: Below 1.0905, the next target might be 1.0540 – BBH.

The pair currently trades last at 1.09877.

The previous day high was 1.1111 while the previous day low was 1.102. The daily 38.2% Fib levels comes at 1.1055, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1076, expected to provide resistance.

The British pound has extended its reversal from session highs near 1.1180 to hit lows at 1.0965 after BoE Governor Andrew Bailey spooked investors, revealing the latest monetary policy measures to stabilize the financial system.

Bailey has warned about unprecedented volatility in the long end of the gilt market and urged pension fund managers to finish rebalancing their portfolios by Friday when the bow is planning to end its emergency support program for the country’s bond market.

The Bank expanded the bond-buying program on Tuesday to include inflation-linked debt, two weeks after having launched it in an attempt to manage the turmoil in the bond markets triggered by Prime Minister Liz Truss’s announcement of unfunded tax cuts.

The pound has dropped sharply on the back of Bailey’s comments, with the pair turning negative on daily charts, on track to post a more than 4% reversal over the last five days, after peaking near 1.1500 last week.

FX analysts at BBH, see the pair accelerating its downtrend below 1.0905: “A break below 1.0905 would set up a test of the September 28 low near 1.0540 (…) Only time will tell, but we note that whatever measures the BoE takes, it can only address the symptoms (disorderly markets) and not the underlying malady (irresponsible fiscal policy). Only the government can turn this thing around.”

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.0984 at the time of writing. Pair opened at 1.1057 and is trading with a change of -0.66 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.1207, 50 SMA 1.1594, 100 SMA @ 1.1905 and 200 SMA @ 1.2526.

The previous day high was 1.1111 while the previous day low was 1.102. The daily 38.2% Fib levels comes at 1.1055, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1076, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.1014, 1.0971, 1.0922
• Pivot resistance is noted at 1.1106, 1.1154, 1.1198

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