GBP/USD Forecast: Fakeout at 1.37? Initial surge may prove short-lived despite good reasons to rise
First impressions can sometimes be deceiving – and GBP/US potential move above 1.37 may also prove a selling opportunity. Apart from entering oversold conditions (see below) there are reasons for a pause after the justified advance.
Pound/dollar received a dual boost on Tuesday. First, Bank of England Governor Andrew Bailey stated that negative interest rates are "controversial" – seeming to put the discussion to rest. The specter of sub-zero rates has been weighing on sterling since June 2020 and shelving the idea removes one downside risk. Read more...
GBP/USD hits 1.37, highest in almost three years
European stock markets were flat in early trade on Wednesday after a mildly positive session on Wall Street and mixed bag in Asia. Reflationary pressures continued as US 10-year rates rose close to 1.2% and the 2s10s curve steepened to its widest since May 2017. Equity markets are coming off record highs and the chop sideways reflects a degree of uncertainty as investors pick their way through the minefield of cases, vaccines, stimulus, reflation and an upcoming earnings season.
Coronavirus cases are picking up in China, raising concerns about a fresh wave in Asia's largest economic driver. Chinese stocks were lower, while shares in HSBC and Standard Chartered led the decliners on the FTSE 100 at the open. But progress in vaccinating populations in the UK and US, with Europe moving more slowly but still in the right direction, continues to underpin a broadly positive risk outlook, even if valuations are stretched and rising rates could cause trouble down the line. Read more...
GBP/USD outlook: Bulls pressure key 1.37 barrier but risk of stall exists
Cable keeps firm bullish tone in early Wednesday’s trading and extends strong rally from the previous day (the pair was up 1.04% for the day in the biggest one-day rally since Nov 5), pressuring key barriers at 1.3700 zone (new multi-month high / upper 20-d Bollinger band).
Full retracement of 1.3700/1.3451 pullback suggests that corrective phase is over and larger bulls are ready to resume.
Fibo projections at 1.3763 (123.6%) and 1.3800 (138.2%) mark immediate targets, with stronger acceleration to threaten psychological 1.40 barrier.
Rising stocks and weaker dollar underpin fresh risk appetite and lift sterling, as Brexit story is currently sidelined, but worries about pandemic remain and could deflate pound. Read more...
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