Credit Suisse discusses GBP/USD technical outlook and flags a scope for a retest of key resistance at 1.2643/71.
"GBPUSD has seen another strong push higher following the break above its downtrend from early March, helped by the weakening USD, with strength having extended to the 78.6% retracement of the April/May fall at 1.2522. Whilst this should be allowed to cap at first for a pullback, the risk stays seen higher for a break in due course for a fresh challenge on what remains seen as more significant resistance from the April highs and 200-day average at 1.2643/48 and 1.2671 respectively. We would again expect significant sellers to show here," CS notes.
"A close above 1.2671 though would instead suggest we are seeing a more significant turn higher, with resistance seen next at 1.2711 – the 78.6% retracement of the March collapse. Support for a pullback is seen at 1.2457 initially, then 1.2426, with 1.2375 now ideally holding to keep the immediate risk higher. A break can see a deeper retracement lower to 1.2330/22, but with better buyers expected ahead of here," CS adds.