GBP/USD outlook: Recovery attempts remain capped for the third straight day

Slobodan Drvenica Windsor Brokers

Cable edged higher on Wednesday and retests the ceiling of near-term range in which the price holds for the third straight day.
Double-Doji candle (Mon/Tue) with longer upper shadows points to indecision, as technical studies remain mixed.

Rising daily Ichimoku cloud (spanned between 1.3428 and 1.3302) underpins, while diverging daily Tenkan/Kijun-sen after creating a bear-cross, pressure.

Solid resistances lay at 1.3536/48 (range top / Fibo 23.6% of 1.2869/1.3433 / falling daily Tenkan-sen) so far limit the upside, with sustained break here needed to generate initial bullish signal and open way for stronger recovery towards 1.3600 (Fibo 38.2%) and 1.3635 (daily Kijun-sen).

Conversely, violation of range floor (1.3470) and more significant 200DMA (1.3443) and daily cloud top (1.3428) would weaken near-term structure and risk continuation of larger downtrend from 1.3869 (Jan 27 top).

Traders also focus on the fundamentals as growing bets that the Bank of England may may opt for 25 basis points rate cut in March (the notion is supported by cooling inflation and improving signals about economic growth) and signals that Fed policymakers’ stance turns more hawkish, would make the dollar more attractive.

In such scenario, Sterling would lose traction against its US counterpart and probably return to broader downtrend (after violating key supports).

Res: 1.3536; 1.3548; 1.3600; 1.3651

Sup: 1.3470; 1.3428; 1.3390; 1.3338

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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