GBPUSD was supported by our strong supply demand and liquidity zone at 1.36000 price action - where the bears failed to provide any further losses to the cables and the momentum shifted to bulls by pushing the pair higher above 61.8% fibo retracement zone. Instead, Great Britian Pound failed to provide a bullish closing above exponential moving average 50 and 200 in the daily time frame while again running lower and below 1.37000 - 1.37500. Two meetings this week indicated that the Bank of England (BOE) and the Fed are moving to curtail and then end their extraordinary bond purchases. These programs have kept sovereign and commercial interest rates near historic lows since last March.

In the UK, the case for reducing the £875 billion asset facility received two additional votes in the Monetary Policy Committee (MPC) meeting on Thursday, after the members voted 8-1 to keep the main rate at 0.1%.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The technical weakness shown by the drop through 1.3700 combined with the US Federal Reserve’s taper aggression bodes ill for the GBP/USD. The US 10-year yield added 4 basis points on Friday while the 10-year Gilt return stagnated.

Wednesday’s finish at 1.3622 was the lowest since January 15 and if, perhaps we should say when, it is breached, the absence of any technical support below that level with a reference nearer than the first two weeks of the year is a marked weakness.

The 21-day moving average (MA) at 1.3771 and the 50-day at 1.3788 were crossed last Friday and have not been approached since. Even Thursday's post-BOE run stopped at 1.3750, well short of intersection. Those MA's form a substantial band of resistance. Only the 200-day MA retains a slight upward cast and at 1.3842 is coincident with resistance at 1.3850.

GBPUSD

Sep 26 2021