GBP/SGD: Will The Pound Recover In September?
GBP/SGD is down close to 3.00 percent in August and over 10% lower on the year. The question is, can the British pound stage a comeback next month?
Brits have had a rough ride in 2022. The economy is faltering, energy costs are rising fast, and the pound is in freefall.
The Ukraine conflict is battering the UK. The embargo on Russian natural gas is behind the highest inflation in decades, which is expected to cause a cost-of-living crisis in the United Kingdom. As a result, the pound sterling is losing ground fast against many of its major trading pairs. GBP is currently trading at a two-year against the dollar and six-year low against the Singapore dollar.
And with no end in sight to the energy crisis, the pound may weaken further in the weeks and months ahead.
A report from Citibank earlier this month forecasts UK inflation will be above 18.00 percent early next year. With this in mind, the Bank of England is stuck between a rock and a hard place. The BOE has no choice but to continue raising interest rates to combat inflation. The problem is that higher rates will drag economic growth lower.
Singapore’s economy on the hand, has recovered well from the pandemic. Economic output is above pre-covid levels, and expected to remain resilient moving forward. As a result, the British pound to Singapore dollar exchange rate is likely to head lower.
Pound to Singapore Dollar Forecast
The weekly price chart shows that GBP/SGD has broken below the long-term support at 1.6558, which now provides resistance. Notably, the 50-Week Moving Average (WMA) at 1.7678 (green) is below the 100 (blue) and 200 (red) WMA’s, highlighting the bearish momentum.
The Relative Strength Index (RSI) indicator offers some hope for the pound. The RSI reading of 22 is extremely low, suggesting the British pound is oversold. Subsequently, GBP/SGD should find support towards the 2016 low around 1.6000.
So, will the pound go up against the Singapore dollar? Taking everything into consideration, the pound should weaken against the Sing dollar in September. Although if the pound recovers above, 1.6558 the technical outlook improves. For now however, the path of least resistance is lower.
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