- Cable was trading around the 1.5865 area heading into Friday and looked set for a weekly basis gain. However, the price action as the week drew to a close had the GBP/USD pair covering around 189 pips – with the majority of this to the downside – post the NFP report.
- The currency strength chart last week highlighted the GBP as one of the weakest currencies over the mid-term and this bearish momentum has continued.
- Resistance had been found around the highlighted 38.2% Fibonacci level, roughly aligned with the prior swing lows from mid November 2012.
- The pound/dollar pair has ultimately closed the week near the longer term 61.8% Fibonacci area, as highlighted in our previous cable update – an area which acted as support on the 28/1/13.
- Any breakout under this area and extended downside heading into the week of 4th February has the 1.5500 handle as a key focus.
- The GBP has likewise weakened versus the euro, experiencing the biggest daily basis drop in around three-years on Friday 1st Feb. Sterling dropped as much as 1.9% versus the single European currency and closed the day around 0.8687 after hitting 0.8715 during earlier trading.
- It is our opinion that the near to mid term outlook is bearish for the GBPUSD. We will be monitoring the price action on any pullback to the 1.5750 price pivot and further to this the 1.5825 area which has the prior swing low aligned with the 365EMA.
GBP/USD - D1" title="GBP/USD - D1" width="995" height="679">Disclaimer:
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