Overview:
GBP/USD is to consolidate in higher range after hitting two-and-a-half year low of 1.5134 Thursday. Supported by the U.K. government that recorded larger-than-expected surplus of GBP11.4 billion on public finances in January, its biggest for five years (vs GBP6 billion surplus forecast), the GBP demands on retreating EUR/GBP cross, positions adjustment ahead of weekend. But the GBP/USD gains tempered by increased risk aversion, positive USD sentiment, bleak U.K. economic outlook, fears of U.K. ratings downgrade, heightened expectations of more liquidity injection from BOE in coming months. Daily chart si mixed as five- & 15-day moving averages are falling, MACD is bearish, but stochastics is turning bullish at oversold, the bullish hammer candlestick pattern completed Thursday.
Preference:
Sell below 1.533 with 1.5215 and 1.513 in sight.
Support Levels:
S1 - 1.5215
S2 - 1.5134 (Thursday's low)
S3 - 1.5123 (July 21, 2010, low)
Alternative scenario:
Buy above 1.533. The upside penetration of 1.533 will call for 1.541 and 1.5445.
Resistance Levels:
R1 - 1.541
R2 - 1.5445
R3 - 1.5490 (Wednesday's high)
Technical Comment:
The pair is rebounding but stands below its strong resistance, the RSI is reversing down from its overbought area.