Bottom line: GBPUSD long term structure continues to remain bullish against 1.1414 lows print in March 2020. The currency has managed to take out major past resistance around 1.3500 handle over the last week. Bears might be inclined to remain in control from here on.
Fundamental Outlook:
EURUSD had rallied through 1.2010 levels before finding selling pressure over the last week. The exchange rate might remain under pressure over the next several weeks as risk aversion might have triggered on Friday. The safe haven US Dollar might be set to gain further.
FTSE had dropped to 5776 last week before closing at 5837, down over -2.47%. Global equity markets closed in the red over the last week with Dow Jones at (-1.82%), SPX500 down (-2.31%) and DAX (-1.46%). Investors might be wary of potential volatility over the next 4-8 weeks.
GBPUSD had dropped through 1.3176 on Friday before finding some support and closed around 1.3276 mark. The exchange rate might witness further volatile price action as it takes its cues from the Brexit deal. Fisheries remain major concern as EU and UK negotiations resume today. Adding further pressure might be the rising unemployment and the requirement of another stimulus as stated by BoE.
Technical Analysis:
GBPUSD might have finally managed to carve a potential top just below 1.3500 handle on September 01, 2020. The currency had reversed sharply lower since then and print around 1.3176 mark before pulling back. It is trading around 1.3233 for now as bears might prepare to remain in control.
GBPUSD had earlier dropped to multi-year lows around 1.1414 in March 2020. Since then, it has remained in control of bulls and managed to produce a religious uptrend through 1.3483 levels. Also note that bulls almost took out major resistance around 1.3500 handle.
GBPUSD might be preparing to produce a meaningful corrective drop towards 1.2200 handle, before turning higher again. Also note that fibonacci 0.618 retracement is seen through 1.2196 levels and high probability remains for a bullish bounce.
Most traders might be willing to turn bearish around interim resistance at 1.3300/50 levels. Protective stops might remain above 1.3500 resistance zone while projected targets might go towards 1.2200 mark respectively.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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