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Dec 30 - 11:55 AM

GBP/USD's Short-Squeeze Fueled Rally Targets 1.3570-80 Hurdles

By Randolph Donney  —  Dec 30 - 11:09 AM

  • Huge GBP/USD spec shorts taken near Dec's key lows are being squeezed

  • Sterling's 1.35215 high Thur is highest since Nov. 10 breakdown day

  • Rapid advance catches shorts out, spreads Bollis, clears 55-day MA

  • The 55-DMA is at Thur's 1.3455 low, daily RSIs are nearly overbought

  • Daily cloud span at 1.3491-580 probed, top eyed if base is closed above

  • 61.8% of Oct-Dec drop, weekly kijun, past 23.6%, 21-WMA, July low @1.3570-80

  • Would be hard to clear all that with RSIs high, but short squeeze underpins

  • Risk-sensitive sterling aided by decent US data that helps S&Ps higher

  • Key is whether risk remains on amid Omicron and expected Fed hikes

  • Current bet is lower lethality of Omicron vs Delta, vaxes will limit risk

  • Close above 1.3580 would target 200-DMA and down TL from July @1.3747/43

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Source:
Refinitiv IFR Research/Market Commentary

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