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GBP/USD: downside overdone? - FXStreet

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 7, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Valeria Bednarik, chief analyst at FXStreet explained that the British Pound advanced against the greenback for the past five days, surging up to 1.4247 on Friday, and closing the week a handful of pips below the level.

    Key Quotes:

    "Markets seem to have already digested the possibility of a Brexit, and most experts agree that, despite being unknown territory, it will be negatively in economic terms for the UK. Nevertheless, speculative selling was quite overdone after the GBP/USD fell to the 1.3800 region, its lowest in almost six years.

    This latest recovery, was supported by a mixture of improvement market sentiment and profit taking, and the pair has reached a major static support at this 1.4250 price zone, in which further advances will likely see bulls keeping into the driver's seat.

    From a technical point of view, the daily chart shows that the price has recovered above a still bearish 20 SMA, for the first time since mid February, and that the technical indicators have lost upward strength right below their mid-lines, suggesting some consolidation/short term downward correction for this Monday.

    In the 4 hours chart, the price is still below the 200 EMA, while the technical indicators have lost upward strength near overbought territory, in line with a limited downward corrective move."
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