What next after the breakout?
It hasn’t been a great couple of weeks for GBP/USD. From pushing a break above 1. 40 to breaking below moving averages and threatening to break below recent lows.
The outlook for the pound remains promising but the dollar is on a tear and, like others, the pound is suffering the consequences.
On Thursday, the pair broke below the 200/233-day SMA band, a major breakout that comes following a bearish rotation off a 61.8 fib level.
It’s not looking good for cable, with the next test of support being the July low at 1.3572. While this move is more reflective of the resurgence in the greenback than weakness in the pound, a move below this level would be very bearish , indeed.
The question is whether it will have the momentum to keep up the recent move. Any rebound could see a test of resistance around 1.3726.