GBP/USD in trouble below May 2010 low; targets 1.3500

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 18, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - GBP/USD's bear trend stemming from July 2014 accelerated towards the end of 2015 and that momentum has picked up in the first two weeks of 2016.

    In light of worsening data in the UK, global risks, oil below $30.00, uncertainties relating to the EU referendum and prospects of a housing crash, investors are fleeing the pound and looking to the greenback and US assets for potential returns.

    The pound has lost some 10% of value during the last half of a year, 6% of that was lost in just the past six weeks after the dovish BoE November Quarterly Inflation report that pushed back rate hike expectations in the UK and decoupled the convergence between The Old Lady and Fed that was being priced in to the pound above 1.5000.

    Furtehr out, there are also concerns over the UK's budget deficit where some are predicting it to be as large as GBP40b by 2020 due to George Osborne's spending cut plans. Meanwhile, focus will soon turn back to the Fed with the live FOMC meeting coming up next week and the possibility of further rate increases will keep traders alert.

    GBP/USD levels

    Technically, in daily RSI (14) now oversold, GBP/USD continues to print fresh lows in bearish grind crossed below the 1.4291/29 78.6% retracement and the May 2010 low. Karen Jones, chief analyst at Commerzbank explained that 1.4229 is the last defense for the 1.3502 January 2009 low.
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