GBP/USD: upside limited on Brexit fears?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    GBP/USD's bid is fragile and has run in to supply, meeting resistance at the highs of the end of Feb rally from below 1.3834 at 1.4282.

    GBP/USD may have made a recovery on the greenback's weakness, but risks to the downside still outweigh on a fundamental basis - just look at the opinion polls in respect to a Brexit for example.

    Analysts at Rabobank explained:"The average of six polls between February 13 and 25 indicated that the ‘Remain' vote was ahead with 55% vs. 45%. Given reports that the amount of undecided voters is still large, the UK's EU vote could still go either way, " and added, "On the basis that the political uncertainty is a currency negative factor, we continue to see downside risk for sterling on a 3 mth view. Our forecasts that GBP can recover to GBP/USD1.50 and 0.70 on a 12 mth view assumes that the June 23 referendum will result in a ‘Remain' vote."

    GBP/USD levels

    GBP/USD is now testing below the 50 sma on the 1hr sticks and targets a break of the 10 sma on the same time frame at 1.4170 for a run at 1.4080 where the recovery started to consolidate on the 2nd March. S3 at 1.4129 maybe a fragile level support before such an objective can be met. To the upside, 1.438 and R2 is compelling where early Feb's bearish attempts were supported, ahead of 1.4423 and R3.
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