GBP/USD Outlook: Sterling consolidates above new 20-month low; near term outlook remains negative

Slobodan Drvenica Windsor Brokers

GBPUSD

Cable consolidates above new 20-month low at 1.2506, posted on Monday, after 1.10% fall (the biggest one-day fall in Dec).
Pound fell sharply after UK PM Theresa May decided to postpone parliamentary vote on Brexit deal, with rising concerns about possible scenario of chaotic exit of the UK from the European Union, sparking strong sell-off.
Fresh bears met target at 1.2508 (Fibo 76.4% of 1.1930/1.4376, 2016/2018 recovery phase) and could travel lower as bearish sentiment soured further on rising uncertainty.
Fibonacci projections at 1.2418 and 1.2268 (138.2% & 161.8% of bear-leg from 1.3297, 20 Sep high) mark next targets, with 2016 post-Brexit vote lows at 1.20 zone, coming in focus.
Corrective upticks could be seen as positioning for fresh push lower and expected to be capped by former lows at 1.2661/95.
UK jobs data, due today, could provide fresh signals, as forecasts show increase in employment and fall in jobless claims in Nov, while another key indicator, average earnings is expected to show unchanged result at 3%.
Better than expected releases today could boost pound, but stronger bullish signals, which would neutralize strong downside risk, could be expected on break above 1.2719 (falling 10SMA) and 1.2773 (falling 20SMA).

Res: 1.2600; 1.2661; 1.2695; 1.2719
Sup: 1.2551; 1.2506; 1.2418; 1.2365

Interested in GBPUSD technicals? Check out the key levels

1. R3 1.2964
2. R2 1.2862
3. R1 1.2711
PP 1.2609
1. S1 1.2457
2. S2 1.2355
3. S3 1.2204

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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