GBP/USD

[John Aaby]

 What is your opinion on the GBP/USD? Where do you see the pair trading next week?

[Brundle Mark]

Hi Marko, thanks for the question. 

GBP/USD has been struggling to move higher in the previous weeks. Looking at the price action, it looks like it wants to head lower in the coming days. This is especially evident as the price action seems hesitant to push higher after failing to move above the $1.23 handle.

“The negative view we previously held for the kiwi on the back of a dovish Reserve Bank can now be extended to the pound and the BOE. For now, with the soggy dollar protecting cable downside, we prefer to express this view through a higher euro/sterling,” Terence Wu, FX strategist at Singapore’s OCBC Bank, noted. 

The pound made a bullish signal when it facilitated a break above a descending trend line, however without the ability to sustain the bullish momentum and push the price action higher. This opportunity was utilized by the sellers, who were able to press the price action lower near the $1.22 support.

The risk is clearly to the downside. A break of the $1.22 support line would open the door for a move below $1.21. On the other hand, the $1.23 level will continue to provide resistance if the pound turns higher again.