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Mar 30 - 11:55 AM

GBP/USD - COMMENT-Sterling Outperforms Euro, Yen In Slide But More Losses Ahead

By Paul Spirgel  —  Mar 30 - 09:44 AM

Sterling slid against the dollar on Tuesday, and while its decline was milder than the euro and yen it still faces risks of more losses.

Though the pound has firmed against other majors, cable remains well below its Feb. 24 high at 1.4240, as the combination of accelerating U.S. vaccinations and stimulus bolster Treasury yields, underpinning the dollar.

The UK's early vaccine headstart versus Europe has helped sterling broadly, with as UK lockdowns recede while restrictions remain in key EU economies in the face of rising cases and hospitalizations remain in force.

But lingering Brexit issues cloud the growth picture, which could keep UK rates subdued in the near-term, adding further downward pressure on GBP/USD.

Cable's recent dip into the daily cloud, which spans 1.3894-1.3626 and trailed GBP/USD as it rose from November 2020 lows, hints at further weakness.

Support at 1.3674, the 50% Fib of 1.3108-1.4240's Nov-Feb rise is bruised but holding. A dip below the daily cloud would open the way for further unwinding of recent GBP longs 1096742NNET and a test of 200-day moving average support by 1.3274.
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Source:
Refinitiv IFR Research/Market Commentary

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