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GBP/USD Dips Continue to Draw Demand

GBP
MNI (London)
  • GBP was already on the rise Tuesday when the easing in UST yields provided GBP/USD's recovery an added boost which pushed it up to $1.3900 in Europe, NY taking it on to $1.3925 before momentum faded.
  • Rate met support at $1.3881 on the pullback. Another look above $1.3900 struggled to gain a foot hold before closing at $1.3888.
  • Move Tuesday aided by a move back into risk which saw an easing in UST yields, equities saw a sharp bounce in tech stocks, with the US $1.9tln fiscal package to be voted on today, early enough to be signed into law later Wednesday.
  • UST yields performed a mild recovery in Asia but prompted USD demand which took GBP/USD back below $1.3880, met some support ahead of $1.3860 before posting a low of $1.3846. Rate has since recovered to $1.3870 into Europe.
  • EUR/GBP, which saw an extended low of Gbp0.8550 in NY Tuesday, recovered to Gbp0.8570 into the close but remains well below its key 10-dma (current Gbp0.8621) which keeps outlook bearish(GBP supportive).
  • Support $1.3835(61.8% 1.3779-1.3925), $1.3813/12(76.4%/rising support Dec21) ahead of $1.3800 then $1.3779.
  • Resistance $1.3900/05, $1.3925/26(Mar09 high/61.8% 1.4017-1.3779) ahead of $1.3961(76.4%)
  • A light calendar in the UK Wednesday. Focus on US CPI 1330GMT and US 10-yr note auction at1800GMT (30-yr Mar11).
  • MNI Techs: Cable continues to consolidate. The outlook though remains bearish. Price has recently cleared the 20-day EMA and a number of near-term support levels. The focus is on $1.3768 next, the 50-day EMA. Clearance of this average would leave the key bull channel support at $1.3730 exposed. The channel is drawn off the Nov 2, 2020 low and a break would represent an important short-term reversal. Firm resistance is $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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