GBP/USD outlook: Pressure on sterling rises on growing third virus wave

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable hit new 7-week low (1.3670) in early European trading on Thursday, but the action is holding within narrow range and signaling consolidation after strong fall in past two days.

Wednesday’s penetration and close within rising daily cloud generated bearish signal, but bears may take a breather before attacking pivotal Fibo support at 1.3641 (38.2% of 1.2675/1.4238 upleg), as stochastic is in deep oversold territory on daily chart and 14-d momentum turned north.

Sterling remains under pressure on growing coronavirus third wave across the Europe and concerns that sharpened EU vaccine export rules may impact UK and potential upticks are expected to offer better opportunities to re-enter strong bearish market.

Daily cloud top (1.3792) and 55DMA (1.3807) should ideally keep the upside protected.

Violation of 1.3641 Fibo support would expose rising 100DMA (1.3610) and more significant daily cloud base (1.3560).

Res: 1.3708; 1.3756; 1.3792; 1.3807.
Sup: 1.3670; 1.3641; 1.3610; 1.3560.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.3825
2. R2 1.3792
3. R1 1.374
PP 1.3707
1. S1 1.3655
2. S2 1.3622
3. S3 1.357

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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