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GBP/USD Edges Off Lows in Early Europe but Tone Remains Soggy

GBP
MNI (London)
  • GBP retains a soft feel into Europe Monday, with GBP/USD probing the Mar25 low at $1.3670 in opening trade in Europe (traded low $1.3669).
  • Risk aversion noted in Asia, along with upbeat comments from Fed Powell at the weekend, have acted to weigh on GBP, with GBP/JPY having moved below Y150.00, though so far holds off easing through Y149.75/60 which some suggest could accelerate the corrective pullback.
  • GBP/USD has edged back to $1.3680 but underlying tone remains heavy.
  • EUR/GBP holds outside the top of its key 1.0% 10-dma envelope (topside current Gbp0.8667) though remains below resistance at Gbp0.8705/06(Mar01 high/38.2% 0.9085-0.8472 2021 range). Break here would also add further negative weight on the GBP, exposing topside of the 2.0% envelope at Gbp0.8753.
  • GBP/USD support $1.3670/69, $1.3641/37(38.2% $1.2676-1.4237/76.4% 1.3452-1.4237 2021 range), $1.3600/1.3590. Resistance $1.3727, $1.3750/60.
  • UK non-essential shops set to open Monday, as the UK continues its COVID lock down easing road map. GBP concern being noted ahead of the Scottish election May06, a strong show by national parties could open calls for another independence referendum vote.
    BOE MPC Tenreyro(dove) speaks at 1300GMT
  • MNI Techs: GBPUSD maintains a softer tone. The pair found resistance last week at 1.3919, on Apr 6. The failure at that high highlights the importance of resistance relating to the former bull channel drawn off the Nov 2, 2020 low - the channel base was cleared Mar 23. The base intersects at 1.3949 and a strong break through this resistance is required to strengthen a bullish argument. Attention is on key support and the bear trigger at 1.3670, Mar 25 low. A break would open 1.3641, a Fibonacci retracement.
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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