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Apr 21 - 11:55 AM

GBP/USD - COMMENT-Sterling Counting On Fibo Support By 1.3839 After Dip Below 1.3900

By Paul Spirgel  —  Apr 21 - 10:52 AM

GBP/USD slipped on Wednesday, shying away from the previous session's trend high of 1.4009 as it drifted below 1.3900 in early U.S. trade nL1N2ME17X on rising global COVID cases, though the shallow depth of recent retreats offered bulls hope.

The spreading global pandemic has dimmed traders' early 2021 sterling optimism, which was based on the UK's rapid vaccination drive and GBP/USD's inability to make fresh gains above 1.4022, the upper 30-day Bolli, and subsequent dip within its daily cloud spanning 1.3950-1.3846 has weakened the pound's bullish structure.

But the shallow cable declines indicate lingering support, and bulls remain in control above 1.3839, the 50% Fib of 1.3670-1.4240 recent rise, which lies amid a cluster of daily moving average supports from the 55-DMA by 1.3864 to the 21-DMA by 1.3800.

A close below 1.3800 could shift momentum firmly back to sterling bears, but the ECB's meeting and news conference on Thursday may be critical after the pound's 3.3% year-to-date gains versus the euro.

A growing divide within the ECB on asset purchases nIfpd4qcD and ongoing stimulus may push the pound higher versus the euro tempering further weakness versus the dollar.

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Source:
Refinitiv IFR Research/Market Commentary

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