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On Friday, GBP rose higher against USD but failed to close above 1.6060 – 1.6080 resistance zone representing the 23.6% Fibonacci Retracement Level of its rally from a low of 1.5267 on June 1 to its recent high of 1.6309 struck on Sept. 21.
On Monday, GBP initially traded lower against USD but managed to hold the 50-day SMA support, currently around 1.6020. The pair is now holding steady and is hovering around 1.6060 - 1.6080 important zone.
As was already mentioned in previous report, should the pair slip below the 50-day SMA and the psychological support at 1.60 level, the pair seem to extend the downward momentum towards 1.5910 level - the 38.2% Fibonacci Retracement Level.
On the upside, short-term up-move is likely to get extended towards 1.6210 – 1.6220 resistance zone, should the pair decisively move above the current resistance zone at 1.6060 – 1.6080 area. Intermediate resistance is seen near 1.6130 – 1.6140 zone.
Short-term momentum for the pair remains biased on the downside due to the possibility of further monetary easing by the BoE.
In the near-term, the pair seems vulnerable to further downfall, initially towards 1.5910 support – 38.2% retracement level and further towards sub 1.5800 level. However, decisive up-move above 1.6210 – 1.6220 resistance zone might negate the medium-term bearish outlook for the currency pair and the up-trend for the currency pair is likely to be extended beyond the very strong resistance zone near 1.63 – 1.6330 zone.
Haresh Menghani
Market Analyst
Admiral Markets
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