23 Sep 2013
GBP/USD dropping; can Sterling continue to out-perform?
FXstreet.com (London) - GBP/USD is still very much benefitting from the Feds decision to not taper, while UK of late has been disappointing.
Research teams at BBH said, “The Fed's decision not to taper last week does not exactly put monetary policy on the back burner. Bullard's comments before the weekend that it was a close decision and tapering was possible in October if the economic data was better, keeps the market on edge. Several Fed officials speak this week and the market is looking for insight into the Fed's thinking”. Meanwhile, for Sterling and the UK, research teams at RBS said “ the dovish forward guidance tweak came at a rather inopportune time as it coincided with an abrupt turn in the data. This has clearly emboldened MPC hawks to cast aspersions on the BoE's 'no hikes until 2016” They continues to say, “With positioning still marginally short, GBP has upside short-term on a favourable move in rate spreads. In our September FX Monthly, we have hence revised higher our near-term profile for GBP/USD. However, we still look for GBP/USD to move lower over the next 6 months, on both a stronger USD and weaker GBP”.
GBP/USD Levels
The 20 DMA is 1.5726, the 50 DMA is 1.5530 and the 200 DMA is 1.5485. RSI (14) reads 69.27 1.5893 1.5936 1.5955 1.5986 1.6017. Spot is currently 1.6035 while resistances are 1.6043,1.6066, 1.6099 and 1.6164. Targets on the upside are for the 2009-2013 downtrend at 1.6331 while failures to the upside and a break below 1.5955 opens up 1.5880/90 for 1.5600 psychological target.
Research teams at BBH said, “The Fed's decision not to taper last week does not exactly put monetary policy on the back burner. Bullard's comments before the weekend that it was a close decision and tapering was possible in October if the economic data was better, keeps the market on edge. Several Fed officials speak this week and the market is looking for insight into the Fed's thinking”. Meanwhile, for Sterling and the UK, research teams at RBS said “ the dovish forward guidance tweak came at a rather inopportune time as it coincided with an abrupt turn in the data. This has clearly emboldened MPC hawks to cast aspersions on the BoE's 'no hikes until 2016” They continues to say, “With positioning still marginally short, GBP has upside short-term on a favourable move in rate spreads. In our September FX Monthly, we have hence revised higher our near-term profile for GBP/USD. However, we still look for GBP/USD to move lower over the next 6 months, on both a stronger USD and weaker GBP”.
GBP/USD Levels
The 20 DMA is 1.5726, the 50 DMA is 1.5530 and the 200 DMA is 1.5485. RSI (14) reads 69.27 1.5893 1.5936 1.5955 1.5986 1.6017. Spot is currently 1.6035 while resistances are 1.6043,1.6066, 1.6099 and 1.6164. Targets on the upside are for the 2009-2013 downtrend at 1.6331 while failures to the upside and a break below 1.5955 opens up 1.5880/90 for 1.5600 psychological target.