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GBP Begins to Meets Friends, but Underlying Tone Remains Bearish

GBP
MNI (London)
  • General risk aversion acted to keep the downside pressure on GBP/USD Wednesday, pressed rate to an extended low of $1.3674 during the European morning but was able to recover and hold for the most part above $1.37 through the NY morning session, sinking post fix back to $1.3680 into the close.
  • Move was seen USD driven as EUR/GBP remained confined within Tuesday's range, though again held above its 10-dma which keeps a bearish underlying tone on GBP.
  • GBP/USD trades outside the base of its 1.0% 10-dma envelope (current $1.3705), a situation the rate tends not to like and will try and edge back inside, though the recent move lower has seen the 10-dma ease and thus envelope easing as well.
  • Support $1.3679/74, break exposes Feb05 low at $1.3663 ahead of $1.3641/37 (38.2% 1.2676-1.4237/76.4% 1.3452-1.4237 2021 range) and current 2.0% envelope base at $1.3566. Resistance $1.3700/10, though rate needs to push back above $1.3755/75 to relieve current pressure.
  • A smoothing in the UK/EU COVID vaccine spat may provide some risk relief.
  • UK CBI Reported Sales at 1100GMT provides domestic data interest.
  • US Jobless Claims, GDP and PCE at 1230GMT. Fed speak noted through the NY session.
  • MNI Techs: GBPUSD is bearish. Tuesday's move lower confirmed a breach of the bull channel base from the Nov 2, 2020 low. Furthermore, price has this week cleared the 50-day EMA and a former key support at 1.3779, Mar 5 low, triggering an important short-term reversal. The focus is on 1.3663 next, Feb 5 low. On the upside, the former channel base at 1.3835 today, provides an initial firm resistance. Heavy!
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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