GBP/USD corrects from 3-1/2 month tops, comes down to mid-1.3100s
Our preference: long positions above 1.3150 with targets at 1.3220 & 1.3260 in extension.Alternative scenario: below 1.3150 look for further downside with 1.3115 & 1.3080 as targets.
• A modest USD bounce prompts some profit-taking after last week’s strong upsurge.
• Traders also seemed to lighten their bullish bets ahead of Tuesday’s Brexit vote.
• BoE Governor Carney’s scheduled speech eyed for some short-term trading impetus.
The GBP/USD pair extended its steady intraday retracement slide and
eroded a part of Friday’s strong upsurge to the highest level since mid-October.A combination of supporting factors assisted the pair to continue gaining strong traction on Friday and build on the recent bullish momentum further beyond the very important 200-day SMA,
to levels just above the 1.3200 handle.Against the backdrop of diminishing risks of a no-deal Brexit, news that Ireland’s DUP was prepared to conditionally back the UK PM Theresa May’s
Brexit Plan B provided an additional boost to the already stronger British Pound.The positive momentum was further supported by a broad-based US Dollar selloff, triggered by news reports that Fed officials are close to putting an end to the central bank’s balance sheet normalization sooner than expected.
The USD bearish pressure now seems to have abated,
at least for the time being and turned out to be one of the key factors prompting some profit-taking, especially after last week’s strong upsurge of nearly 400-pips.
Traders also seemed to lighten their bullish bets ahead of the parliamentary debate and vote on the amended Brexit plan, scheduled on Tuesday. In the meantime, the BoE Governor Mark Carney scheduled speech, later in the day,
might influence the GBP price dynamics and produce some short-term trading opportunities.