GBP/USD set to turn higher, tough resistance seen at 1.4000/15 – Credit Suisse

GBP/USD weakness on Friday was abruptly reversed post the US payrolls report and the subsequent recovery has seen a bullish “reversal day” established. Economists at Credit Suisse look for the recovery to extend further to 1.3931/40, then to the 1.4000/15 neighborhood.

A bullish “reversal day” on Friday suggests a low may now be in place

“With a bullish daily RSI momentum divergence in place, we look for the recovery from Friday to extend further. Resistance is seen next at 1.3900, above which can add weight to this view for a move back to 1.3931/40, then what we see as more important and tougher resistance at the late June reaction high and 55-day average at 1.4000/15.” 

“Whilst we would look for a fresh cap at the 1.4000/15 region for now, a break would see a base complete to further reinforce the recovery with resistance then seen next at the downtrend from the beginning of June, seen at 1.4052 today.”

“Support is seen at 1.3863 initially, then 1.3837, with a break below 1.3818 needed to see the risk shift lower again with support then seen next at 1.3777, then Friday’s low at 1.3734. More important support remains seen placed at 1.3669/48.”