Sterling had its worst week for over three years last week [Video]

Richard Perry Independent Analyst

GBP/USD

Sterling had its worst week for over three years last week. Losing over -330 pips this was the biggest correction since the October 2016 flash crash. However, the selling pressure was abating slightly into Friday’s close and there is a degree of support now forming around the 38.2% Fibonacci retracement (of $1.2193/$1.3514) at $1.3010. Considering this was the key breakout support of the old highs $1.2975/$1.3010, this is an important support area for the bulls to protect. Momentum indicators have been corrective on the recent decline, but are also around key levels now. RSI needs to hold around 50 (a shade below now), MACD lines above neutral and Stochastics now back around key turning levels (of previous months). Volatility is still elevated (although this is likely to subside into Christmas week) but breaking the run of lower daily highs is needed. Resistance at $1.3080 from Friday. For a sense of support (and possible recovery) to build, hourly RSI above 60, and MACD above neutral. A close below $1.2975 continues the retracement, with the 50% Fib at $1.2850 and support at $1.2820.

Author

Richard Perry

Independent Analyst

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD declines toward 1.1700 on solid USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. A solid comeback staged by the US Dollar weighs heavily on the pair, as traders look to USD short covering ahead of US CPI on Thursday. However, the downside could be capped by hawkish ECB expectations.

GBP/USD slides toward 1.3300 after softer-than-expected UK inflation data

GBP/USD has come under intense selling pressure, eyeing 1.3300 in the European session on Wednesday. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board.

Gold clings to modest gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps ithe pair hold its ground.