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Oct 07 - 01:55 PM

GBP/USD - COMMENT-Sterling Supported By Risk Rebound, BOE, But 1.3662 Is Key Hurdle

By Randolph Donney  —  Oct 07 - 11:49 AM

GBP/USD rose on Thursday, riding a recovery in risk-taking, but it must clear major resistance at 1.3662 to weaken the grip bears have had since June's double-top, with Friday's U.S. jobs report a potential catalyst in either direction.

Sterling has enjoyed support from monetary policy, with aggressive BOE rate hike expectations outpacing those for the Fed in timing.

Comments from new Bank of England Chief Economist Huw Pill nL9N2PO006 reinforced expectations for the BOE lifting rates by February, and perhaps as soon as December.

That's allowed the uptrend in 2-year Gilt-Treasury yields spreads to move further into positive territory, supporting GBP/USD, but only with the help of risk-on flows.

Thursday's 1.3571 low was on the daily tenkan.
Tuesday's 1.3647 high is the next hurdle ahead of the daily kijun, weekly tenkan, 55-week moving average and 50% Fibo of September's 1.3913-1.3412 slide at 1.3662.

The rebound from 1.3412 has allowed oversold daily RSIs to reach neutral levels.
And the 1.3412 low barely breached the 38.2% Fibo of the rise from April 2020's low to this June's 1.4250 peak.

UK labor and supply shortages due to the pandemic and Brexit's immigration restrictions nL1N2R10B7nL1N2R30HO keep the macro burden on bulls for now.

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Refinitiv IFR Research/Market Commentary


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