GBP/USD Analysis: Volatility at post Scottish referendum high, could re-test 1.48

The GBP/USD pair fell for the third week of the past four due to political uncertainty and a rebound in the USD weighed. The losses, to some extent, were capped by hawkish comments by BOE’s carney and Broadbent. The current week begins with a rather thin economic calendar out of the UK. However, the US is set to report personal income and spending numbers later today. The GBP is likely to remain under pressure during the European session, mainly on account of election uncertainty. The GBP/USD volatility gauge has shot to its highest since the Scottish referendum, while the latest CFTC data shows an increase in the net –short GBP position for the third consecutive week.

Meanwhile, the chart shows, the pair, currently at 1.4857, is flirting with the 23.6% Fib retracement of 1.5550-1.4633 located at 1.4849. Given the bearish daily, hourly and 4-hour RSI, a break below 1.4849 appears likely, post which the pair could drop to 1.48-1.4790. On the other hand, a fresh demand for Pounds can be anticipated above 1.4882, in which case, the pair could rise to 1.4920-1.4950 levels. Moreover, the pair appears stuck in the range of 1.48-1.5 since the last week. Hence, a daily close above/below the said range could open doors for 1.46-1.52. However, with election uncertainty and US payrolls data slated for release this week, we could witness a bearish daily close below 1.48.

EUR/USD – Gains capped at 1.09, Greece remains a central point

The EUR/USD pair rose to a high of 1.1050 last week, before finishing at 1.0893. The upbeat economic reports out of the Eurozone, coupled with the ECB President Draghi’s upbeat view on the economy supported the shared currency. However, the rebound in the US Treasury yields, and the Greece issue made sure the pair remained below 1.10 levels. Moreover, the markets are likely to look past the German CPI data today and focus on Greece funding woes. Greece’s creditors are expected to deliver a decision on the Greece’s reform plan. If accepted, it shall unlock the next round of bailout funding on Friday. Athens faces EUR 5.8 billion in maturing debt this month in addition to the day-to-day financing needs. An acceptance of the reforms list of Greece’s creditors could see the pair rise back to 1.0950 levels. On the other, the rejection of the reforms list could push the pair back to 1.08.

On the charts, the pair is trading at the 10-DMA located at 1.0870, after having recovered from the low of 1.0853. On Friday, the pair had bounced-back from the hourly 200-MA, although gains were capped at hourly 50-MA. Given, the pair recovered back above 10-DMA, we could see it rise to its 5-DMA and hourly 50-MA located at 1.0898. A break above the same could open doors for 1.0950 levels. On the other hand, failure to rise above 1.09 could see fresh selling pressure in the pair.