The pound has proven stable against the US dollar for most of this year averaging around 1.3850 since March although it did briefly hit a low of 1.3412 at the end of September. Economists at MUFG Bank expect cable to sink into the mid to low 1.3000’s amid concerns that the UK economy will slow more notably heading into year-end. The GBP/USD pair witnessed an intraday turnaround from a short-term descending trend-line extending from late July and retreated over 70 pips from the 1.3825-30 resistance zone on Tuesday. The pullback, however, lacked strong follow-through selling and the pair, so far, has managed to defend support marked by the lower boundary of an upward sloping channel. Meanwhile, technical indicators on the daily chart – though have been losing positive traction – are still holding in the bullish territory. This further makes it prudent to wait for a sustained break below the trend-channel support before confirming that the recent positive move has run out of steam and placing fresh bearish bets.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The GBP/USD pair might then accelerate the corrective slide to the 1.3725 intermediate support en-route the 1.3700 mark and the next relevant support near mid-1.3600s. Some follow-through selling will set the stage for fall towards testing sub-1.3600 levels ahead of the BoE and FOMC monetary policy meetings next week.

On the flip side, the 1.3790-1.3800 region now seems to act as immediate resistance for the GBP/USD pair ahead of the descending trend-line, around the 1.3825-30 supply zone. This is closely followed by the very important 200-day SMA, around mid-1.3800s, which if cleared will be seen as a fresh trigger for bullish traders.

GBPUSD Above 61.8% Fibo level

Oct 27 2021