On Tuesday, GBP witnessed some volatile moves especially against AUD and NZD, on the back of RBA's surprise decision to cut its benchmark interest rate to a record low of 2.25%. Against JPY, it bounced from a 3-month low but weakened against broadly strengthening CAD led by a strong rebound in crude oil prices.
On Wednesday, GBP is trading in a narrow range as investors now look forward to the Bank of England's announcement of its monetary policy decision on Thursday. Given the backdrop, here is a technical overview for GBPAUD, GBPJPY, GBPCAD and GBPNZD.
As could be seen on daily chart, the pair is trading in a well-established ascending trend-channel and on Tuesday witnessed some retracement from 1.9670-80 area, marking the upper trend-line resistance of the channel. The upper trend-line of the channel seems to continue providing strong resistance on the upside, which if conquered has the potential to lift the pair towards 2.0200-20 resistance area, with 2.000 acting as intermediate psychological resistance. Meanwhile on the downside, 1.9260-50 now seems to act as immediate support and a decisive break below this immediate resistance is likely to get extended towards its next horizontal support near 1.8900 area. Moreover, weakness below 1.8900 might trigger some accelerated fall towards a major support near 1.8600 mark, representing the lower trend-line support of the ascending channel.
After dropping below 200-day SMA, the pair once again managed to rebound, holding 176.30 support area, comprising of 61.8% Fib. retracement level of Oct. - Dec. 20147 up-swing and 200-day SMA, on closing basis. The pair, however, is yet to clear its immediate resistance near 179.00 area, marking 50% Fib. retracement level. A move above 179.00 is likely to confront with it major resistance near 180.00 round figure mark, also coinciding with 100-day SMA. Hence, recent price action indicates continuation of range-bound moves until the pair managed to either strengthen above 100-day or decisively breaks and closes below 200-day SMA. Should the pair decisively break and close below an important support confluence near 176.30 area, it seems to initially drop towards 175.00 intermediate support and eventually towards 173.20-173.00 strong support area. Alternatively, a decisive strength above 100-day SMA is likely to accelerate the up-move towards 38.2% Fib. retracement level resistance near 181.40-50 zone.
Following a break-out above a descending trend-line resistance extending from Feb. 2014 through highs tested in April, Aug. and Dec. 2014, the pair last week jumped to its highest level since June 2009. Since then the pair has witnessed some profit taking and nearly tested 38.2% Fib. retracement level of its up-swing in Jan. 2015. The pair is currently is hovering around 23.6% Fib. retracement level, holding above 1.8900 mark. Should the pair continue holding above 1.8900 mark, it seems to possibly make an attempt to test 1.9000 mark resistance, which if conquered might clear its way to retest 1.9200 mark. Alternatively, should the pair drop back below 1.8900 mark, it could possibly be headed back below 1.8830-20 intermediate support to eventually test previous strong resistance marked by 2014 high, now turned support near 1.8700 mark, also coinciding with 38.2% Fib. retracement level support.
Extending its sharp recovery from 8-month low touched in early Jan., the pair on Tuesday, amid extreme volatility, retested 2014 daily closing high resistance near 2.0910-30 area. The pair continued with its volatile move on Wednesday, initially rising to 2.0750 level and then dropping to 2.0350 region. The pair now seems to have stabilized near 23.6% Fib. retracement level of its recovery from Jan. lows to high touched on Tuesday. From current levels, should the pair drop below 23.6% Fib. retracement level support near 2.0540-30 area, it could possibly be headed back to test sub-2.0300 level, marking 38.2% Fib. retracement level support. Further, decisive break below 38.2% Fib. retracement level seems confirm and eventual drop back to sub-2.000 level, marking 61.8% Fib. retracement level, with 2.0100-80 area representing 50% Fib. retracement level acting as intermediate support. Meanwhile, strength above 2.0700-20 horizontal resistance seems to pave way for continuing the upward trajectory towards a very important resistance near 2.1040-50 area, marking multi-year high touched in Nov. 2011, May 2012 and Sept. 2014.
Senior Market Analyst
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