GBPUSD Analysis: Key support broken, weakness expected

Dukascopy Bank Team Dukascopy Bank SA

"On top of soft data from the UK recently ... these fresh signals of a 'hard Brexit' and the risk of another Scottish referendum, enhances our view that the broader outlook for sterling remains negative."

– IronFX (based on Business Recorder)

Pair's Outlook
Buck's strength caused the Cable to slide further down, breaching the strong demand cluster at 1.24. From this point on more, more bearish momentum is likely to follow, as the 55-day SMA pierced the 100-day one on Monday, providing a signal to sell the Pound. The breach of the key support cluster also indicates that the Sterling could relatively soon retest the 1.20 mark. A drop that low is yet to occur, but today trade is expected to close circa 1.2320, while being supported by the weekly S2 slightly lower. Meanwhile, technical indicators retain mixed signals, unable to confirm the possibility of the negative outcome.
Traders' Sentiment
Bulls gave in again, as they now take up 59% of the market, compared to 60% on Tuesday. At the same time, the portion of orders to sell the British currency increased from 49 to 57%.

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

1. R3 1.2540
2. R2 1.2509
3. R1 1.2455
PP 1.2423
1. S1 1.2369
2. S2 1.2337
3. S3 1.2283

Author

Dukascopy Bank Team

Dukascopy Bank SA

Dukascopy Bank stands as an innovative Swiss online banking institution, with its headquarters situated in Geneva, Switzerland.

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