Accompanying the gloom of Queen Elizabeth II's departure, the Pound continued to suffer at the opening of the market earlier this week, seeing the British currency drop to an all-time low in the Asian session this morning.
In addition to the strengthening of the US dollar which managed to maintain the momentum of its excellent performance last week, the decline in the value of the Pound was affected by the announcement of tax cuts by the UK government in an effort to balance the risk of economic recession.
The risk of a recession continues to rise following the central bank of England's (BOE) aggressive move in policy setting with the announcement of a 50 basis point increase in interest rates last week.
If you look at the price movement on the chart of the GBP/USD currency pair, the price has plummeted last Friday with a daily decline of more than 400 pips recorded after passing the support level of 1.12000.
The price drop has also crossed the 1.11000 level to close the trade at the end of the last session around 1.08500.
Not waiting long, the price continued to plunge more significantly with a 500 pips drop exhibited in the Asian session this morning until it passed the lowest level reached in 1985 which is 1.05000.
The price is seen to have dipped below the 1.04000 level to record an all-time low!
There was a price rebound after the plunge, but further price drops are expected to occur in the following sessions.
If the decline continues beyond 1.04000, the recent lows will continue to be recorded again this week.
A price rally is likely to be difficult to happen with prices trending lower.
But if it happens, the 1.08500 level that was the focus at the opening of the Asian session just now will be the target for price increases again.
