The GBP/USD met with more selling on Friday, marking a 2nd straight day of steep selloffs. These follow a slew of good economic data out of the US, allowing for strong buying on the greenback.
The pair has also been due for a correction after the technical pattern on the 4-hour chart yesterday revealed progressively lower double tops along with a failure swing on the RSI indicator.
Analysts at MUFG point to the recent strengthening of the greenback as a market correction in the near term and not the start of a sustained rebound. This outlook makes allowance for a resurgence of the GBP/USD following the market correction.
Technical Outlook for GBP/USD
Price action is now trading in the range formed by 1.39468 below, and 1.39831 above. This comes after the steep slide of yesterday, and today’s intraday bounce at 1.38927. A breakdown of the 1.39468 support allows bears to retest the 1.38927 support. If this support fails to hold, then 1.38520 becomes the next logical target. Additional support is seen at 1.37837 and 1.37490.
On the flip side a bounce from 1.39468 which can take out 1.39831, targets 1.40486. Above this level, the neckline of yesterday’s double top at 1.40986 becomes available, as does the 1.41770 top if the neckline fails to stop resurgent bulls.
GBP/USD Daily Chart