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Nov 24 - 08:55 AM

GBP/USD - COMMENT-Sterling Might Need More Than BoE Rate Hikes

By Peter Stoneham  —  Nov 24 - 07:08 AM

A look at the longer-term chart highlights sterling's vulnerability and suggests rate hikes from the Bank of England might have limited impact.

This year's strong dollar theme is likely to carry on through 2022 and this would fit with bearish indications showing up on the monthly GBP/USD chart.

Sterling closed inside its monthly Ichimoku cloud in October and has fallen deeper into it through November.

A key Fibonacci retracement level, 1.3166, taken off the significant 1.1413 to 1.4250 March 2020 to June 2021 GBP climb serves as a target while the cloud top, 1.3655, contains.
The cloud base at 1.2919 also provides an objective and a potential tipping point.

Looking ahead to early 2022 and an Ichimoku cloud twist could attract GBP/USD or at least drag on any sterling recovery.
The March twist has parameters at 1.2895 and 1.3036.
Cloud twists can appear to attract price.

Monthly momentum readings remain positive, reflecting the strong GBP recovery off the March 2020 1.1413 low, but are poised to flip negative this month or in December.

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GBP/USD monthly Ichimoku chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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