GBP/USD – 10 Days Without a Rally

GBP/USD – 10 Days Without a Rally

GBP/USD – 10 Days Without a Rally

Ten trading days have past without a rally for GBP/USD. This is the longest stretch of weakness for the pair since September. U.K. data has been weak and while the trade deficit narrowed in November, the improvement was less than the market anticipated with falling exports reflecting weaker demand from Europe and China. The Bank of England meets next week and given the recent trend of U.K. data and market volatility, they will be less inclined to raise interest rates in the near future, which could accelerate losses for the British pound.

Technically such a long and exhaustive move begs for a relief rally and that may happen near 1.45, the next psychologically significant support level for GBP/USD. However if 1.45 does not hold then there is no major support for the pair until the May 2010 low of 1.4230. Should GBP/USD rebound, it will find resistance at 1.4650 and 1.4800.

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