GBP/USD Technical Analysis – Digesting Gains Above 1.70
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- GBP/USD Technical Strategy: Flat
- Support:1.6961-96, 1.6859, 1.6765
- Resistance:1.7128, 1.7263, 1.7398
The British Pound has paused to digest gains after rising to the strongest level in nearly five years against the US Dollar. A renewed topside push sees resistance at 1.7128, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis exposing the 50% level at 1.7263. Alternatively, a reversal below support in the 1.6961-96 area – marked by the 23.6% Fib and the May 6 high – targets the 14.6% level at 1.6859.
While entering long is tempting, we will tactically opt to stand aside. A strong correlation between GBPUSD and the UK-US 2-year bond yield spread (20-day percent change studies) puts the spotlight on the policy outlook. A thin UK docket puts US news-flow in focus, with an ample supply of releases lining up to force a re-think of the markets’ post-FOMC reaction. With that in mind, we will stand aside.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.