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Mar 23 - 10:55 PM

GBP/USD - COMMENT-Charts, EU-UK Tensions And The USD Say Sterling Falls

By Andrew M Spencer  —  Mar 23 - 09:04 PM

Sterling closed at a fresh March low on Tuesday as the safe-haven dollar rose and the euro succumbed to fresh worries about a coronavirus resurgence in Europe nL8N2LL074.
Bearish chart signals, a rising dollar and EU-UK tensions point to further losses for the pound.

Positioning also suggests GBP/USD has room to fall as Morgan Stanley's FX positioning tracker shows the market long GBP as of March 22.
The
USD is the largest short despite buying last week, which could continue.

Trust between the European Union and UK is at a low ebb - a negative for sterling.
Northern Ireland trade is a sticking point as the UK has yet to fully implement the Brexit agreement.
The EU are willing to offer flexibility if the UK produces a "detailed road map" of its plans for the area nS8N2L20CF, but have had little response.

Thus the EU is in "no rush" to grant the City of London access to its financial markets nL1N2LL1TC, which is bad news for the UK economy in 2021.

Technically the GBP/USD outlook is bearish, as daily momentum studies, 5, 10 and 21 daily moving averages and 21-day Bollinger bands trend south. The 61.8% retracement of the 2021 rise at 1.3752 has given way and the pound targets 1.3637, the 76.4% retracement. This week's 1.3877 high is initial significant resistance.

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gbp 2 mar 24 Click here

Source:
Refinitiv IFR Research/Market Commentary

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