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GBP on the Back Foot into Europe

GBP
MNI (London)
  • GBP/USD continued to step its way lower through Monday trade, as rate extended its corrective pullback away from Friday's Asia high of $1.4005.
  • Rate had managed to recover to $1.3950 Monday, off its Friday low of $1.3864, only to press lower through NY to an extended low of $1.3853 before it bounced back toward $1.3900 through the 1600GMT fix, closing the day at $1.3904.
  • However, the recovery proved fragile as Asia leaned into it, pressing the rate back to $1.3857 into Europe.
  • Suspension of the AstraZeneka COVID vaccine (linked to the UK via Oxford University and being used extensively in the UK) by several European countries, as well as the legal action by the EU against the UK concerning the N.Ireland border, suggested as reasons for the pullback in sterling, though more likely position adjustments ahead of FOMC and the BOE announcements this week.
  • GBP/USD seen probing below its rising support line, drawn off the Dec21 low, which comes in at $1.3856, which is sustained opens a deeper move toward $1.3846/32(Mar10 low/76.4% 1.3779-1.4005) ahead of $1.3805/00.
  • Resistance remains at $1.3900/10.
  • EUR/GBP back above its key 10-dma (current Gbp0.8589) seen adding to the current bearish move in the GBP.
  • MNI Techs: Friday's sell-off in GBPUSD suggests the end of the recent corrective bounce. The short-term outlook is bearish following the sell-off between Feb 24 - Mar 5. An extension lower would open 1.3779, Mar 5 low ahead of a key bull channel support that intersects at 1.3768 today. The channel is drawn off the Nov 2, 2020 low and a break would represent an important short-term reversal. Firm resistance remains 1.4017, Mar 4 high.
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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