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Apr 14 - 11:55 AM

GBP/USD - COMMENT-Sterling Bears Defer, Bulls Eye Cloud Base Resistance By 1.3834

By Paul Spirgel  —  Apr 14 - 10:47 AM

Sterling rose on Wednesday, bouncing off early U.S.-session lows by 1.3750, and could get an additional boost as recent dollar weakness appears likely to persist.

At 1.3790, cable just below Wednesday's five-session high of 1.3809.

Traders have taken the Fed at its word that rates are likely to remain anchored near recent levels, shrugging off Tuesday's slightly higher-than-expected CPI nL1N2M62L6as front-end Eurodollar rates eased.

The next big data risk is Thursday's retail sales, with Reuters consensus forecast at 5.9% up from -3% in February, with the range of forecasts coming in at 3.9 to 12% m/m EM.

With the Fed unlikely to lift rates soon, the path for GBP/USD is skewed higher.

But, for GBP/USD to rise, the UK will have to resume progress on COVID and deliver on its economic recovery.
A rise above the daily cloud, spanning 1.3901-1.3834, is needed to wrest control from bears.

Tests of support sub-1.37 could trigger further GBP long unwinds, versus the USD and EUR, putting GBP/USD's 200-DMA by 1.3348 in focus.
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GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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