The GBP/USD pair tumbled on Friday and hit its lowest level since October 2020, pressured by comments from Bank of England Governor Andrew Bailey and a stronger dollar across the board.
The pair lost more than 200 pips, falling from a daily high of 1.3035 to an 18-month low of 1.2822 during the New York session.
BoE Governor Andrew Bailey said on Thursday that the bank was walking a tight line between tackling inflation and avoiding recession. On Friday, he added that the BoE would only do quantitative tightening active sales in a stable market.
In contrast, Fed Chair Jerome Powell said he considers it "appropriate" to accelerate the pace of monetary contraction and that the U.S. economy can withstand the 50-point increase that is "on the table" for the May meeting.
Adding to GBP weakness, the UK reported on Friday that retail sales decreased by 1.4% in March after falling by 0.5% in February. This reading was much worse than the 0.3% contraction expected.
From a technical perspective, the GBP/USD pair holds a negative bias according to indicators in the weekly chart, while the pair is poised to post its biggest weekly drop in 2022.
In the daily chart, indicators also point to a bearish continuation. The RSI shows a steep downward slope as it moves into oversold territory, while the MACD histogram reflects renewed selling momentum.
Next supports could be found at the 1.2800 psychological level, followed by the 1.2750 area, ahead of the September 2020 monthly low of 1.2675.
On the other hand, immediate resistances are seen around 1.2900 and 1.3000, ahead of the 20-day moving average lying around 1.3050.
