Sterling relief rally may have further to run
- Cable must close above 1.3155 to sustain rally
- Next upside targets would be 1.3240, 1.3450, 1.3535 and 1.3647
- EURGBP has had a weaker tone since last Wednesday
Since hitting 1.2798 last Wednesday the ship has steadied somewhat for Cable and the last few sessions of last week were a series of Doji candles. Yesterday was a small "Hammer", and today we've seen further gains to a high of 1.3189, and we're currently sitting around a level at 1.3155 that we need to close above tonight (New York close) to add weight to the idea that a bottom is in place, at least for now, and that we can see a bit more on this "relief rally".
The next upside targets would be 1.3240, 1.3450, 1.3535 and 1.3647. We would expect sellers to return at one of these and would be watching for signs of upside rejection as and when they are tested.
Overnight price action has created support levels to reference at 1.3094 and 1.3025.
Chart 1: GBPUSD Daily Chart:
Chart 2: GBPUSD Monthly Chart
Retaking 8446 and 8489 is the bulls' priority for the rest of today, otherwise the retracement "play" is on.
Chart 3: EURGBP Daily
Obviously the big event of the week is the Bank of England rate decision on Thursday. I've got a sneaky feeling it'll be unchanged – governor Mark Carney's way of saying "Keep Calm and Carry on!"
– Edited by Clare MacCarthy
Clive Lambert is chief technical analyst at FuturesTechs