GBP/USD potential drop to 1.2428 – Commerzbank

Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted Cable could slip back towards the 1.2430 region.

Key Quotes

“GBP/USD is interesting – it has actually been contained in a channel since October and yesterday we rejected by the top of that channel at 1.2712. To complicate matters further we note the divergence of the daily RSI and the two combined suggest a spell of weakness. We would allow for a slide back to the 55 day ma at 1.2428 and potentially 1.2253 the 18th January low”.

“We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure. Support at 1.2250 guards the 1.1988/80 recent low”.

“Above 1.2712 would allow for further strength to the 1.2776 December high. Between here and 1.2836 lies several Fibonacci retracements and major resistance and we suspect that it will struggle here”.