GBP/USD outlook: Cable extends recovery on fresh risk appetite, but overall picture is negative
|GBP/USD
Cable rose to the highest in over two weeks in early Monday, lifted by improved risk sentiment on comments from US President Biden about possible reduction of tariffs on China.
Fresh strength signals an extension of last week’s 2.05% rise (the biggest weekly advance since July 2020), adding to initial reversal signal, generated by weekly bullish engulfing pattern.
Improving daily techs (ascending 14-d momentum broke into positive territory and double bull-crosses of 5/10 and 5/20DMA’s underpin the action) while fresh strength broke through important Fibo barrier at 1.2512 (38.2% of 1.3090/1.2155) and eye pivotal level at 1.2622 (50% retracement / daily Kijun-sen), close above which would add to positive signals.
On the other side, fundamentals remain negative, as high inflation slows the growth, with growing threats that the economy is sliding into recession, darkening the outlook.
Near-term bias is expected to remain positive while the price action holds above 20DMA (1.2423), but failure to clear 1.2622 barrier would increase risk of recovery stall, as larger picture remains firmly bearish (weekly & monthly chart).
Res: 1.2622; 1.2637; 1.2697; 1.2733.
Sup: 1.2512; 1.2469; 1.2423; 1.2368.
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