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On Wednesday, GBP eased to a three-week low against USD as data showed UK's services sector growth in September fell below economists forecast. The pair, however, managed to hold support at 1.6060 - 1.6080 zone representing 23.6% Fibonacci Retracement Level of its rally from low hit in June to high formed in September.
On Thursday, GBP climbed to 1.6150 against USD from 1.6093 on Wednesday after the Bank of England left its key interest rate and the size of its asset-purchase program unchanged. The pair is currently quoting at 1.6140.
Now from current levels, the upward momentum for the currency pair seems to get extended towards 1.6210 – 1.6220 resistance zone.
Should the pair manage to decisively strengthen above 1.6210 – 1.6220 resistance zone, short-term up-move is likely to be capped near 1.6300 – 1.6330 zone, near the 13-month peak of 1.6310 hit on September 21 and near medium-term Double Top chart pattern formation visible on daily charts.
On the downside, 1.6080 – 1.6060 zone would now act as important Pivot for further sustainable up-move. Moreover, 1.6100 level on the downside is likely to provide intermediate psychological support for the currency pair.
Should the pair decisively break below 1.6080 – 1.6060 support zone, the pair is likely to accelerate the bearish momentum to immediately test 1.6010 level.
Moreover, decisive close below 1.6080 – 1.6060 support zone would confirm the Double Top formation and the pair seems to be vulnerable for further depreciation, initially towards 1.5910 support – 38.2% retracement level and further towards sub 1.5800 level.
Haresh Menghani
Market Analyst
Admiral Markets
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