Richard Perry
Independent Analyst
GBP/USD
The medium term positive outlook on Cable is coming under pressure. After yesterday’s decisive negative candle took the market back below $1.3000 the outlook is under pressure again. Could sterling be topping out again? The move lower has come on the back of a succession of dovish comments from Bank of England members, which now means that technically, Cable is retreating to a key crossroads. The December correction found support at $1.2900 as the move was seen as another correction within a bull market. The RSI holding above 40 will be key to this, whilst MACD lines moving below neutral would be a big warning sign. Ultimately, on a fundamental basis, we see sterling as performing well in the coming months (stable government, a clearing of the Brexit log jam, and consumer confidence picking up), so weakness is likely to be seen as a chance for the bulls. This case is though made harder if the December low at $1.2900 is broken. Subsequent support at $1.2825 and $1.2765. The hourly chart shows resistance in the band $1.3020/$1.3050 now needs to be cleared to develop upside momentum again.
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