As written here last month, the 5 wave advance from 1.3682 is complete at 2.1160. The GBPUSD has already entered the Fibonacci zone, which began at 1.7916. The next level, 1.7016, is defended by the 2005 low (as well as round number 1.70 support). Expect additional weakness longer term (into at least 1.70).
Deterioration in UK economic conditions and a dovish central bank have forced continued declines in Bank of England rate expectations and likewise led to British Pound declines. Interest rate markets forecast that the British Pound - US Dollar interest rate differential will shrink by a substantial 128 basis points (1.28 percent) in the coming year of trading-nearly halving the GBP's interest rate advantage against the USD. If such market forecasts come to fruition, we could see the British Pound fall further against the US dollar.
British Pound Forex Futures Positioning Signals Short-term Correction
Written by Jamie Saettele, Senior Strategist and David Rodríguez, Quantitative Analyst for DailyFX.com
To contact the authors of this report, please e-mail research@dailyfx.com.