GBP / USD is expected to see further weakness below the neckline to the 2018 high at 1.3710 / 20, with support seen at 1.3487 / 61 and then 1.3430, Credit Suisse analysts report.
Key statements:
“GBP / USD remains under pressure, as expected after its bearish ‘reversal day’ from the ‘neckline’ to the 2018 high at 1.3710 / 20 and a longer correction from the strength of the last four months is still expected, further reinforced by a bearish divergence of the RSI and the USD’s recovery from a clear supportand”.
“The clear break of support at 1.3533 is seen adding weight to a retracement story with support seen below at 1.3487 – the 38.2% retracement of the December rally. With the 26.3% retracement of the entire November rally at 1.3461, we looked for a new bottom in this 1.3487 / 61 zone at the beginning. Then, in due course, support can be seen at the late December low at 1.3430, with better support expected at the 55-day average at 1.3354 ”.
“Resistance is initially seen at 1.3529 / 39, with 1.3577 now ideally capped to hold immediate downside risk. A move back to 1.3636 / 71 can be seen above, but this needs to be left behind to suggest that the correction is over for a retest at 1.3710 / 20 “.
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