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Talking Points:
- GBP/USD Technical Strategy: Flat
- Support: 1.6562 (38.2% Fib exp.), 1.6443 (23.6% Fib exp.)
- Resistance: 1.6658 (61.8% Fib exp.), 1.6754 (61.8% Fib exp.)
The British Pound continues to race higher against the US Dollar having initiated a recovery as we suspected last week. Buyers are targeting resistance at 1.6658, the 50% Fibonacci expansion, with a break above that aiming for the 61.8% level at 1.6754. Alternatively, a turn back below the 38.2% Fib at 1.6562 exposes the 23.6% expansion at 1.6443.
Prices are too close to relevant resistance to make a long trade at current levels palatable from a risk/reward perspective. Furthermore, we are somewhat skeptical about the longevity of Sterling’s push higher on fundamental grounds. On the other hand, a short trade looks premature absent a defined reversal signal. We will hold off taking directional bets here for the time being.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com