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Feb 16 - 11:55 AM

GBP/USD - COMMENT- Sterling Bulls Keep Eye On 1.40 Despite Early NorAm Setback

By Paul Spirgel  —  Feb 16 - 10:07 AM

The pound, having risen to a new 34-month high at 1.3955 in Asia session trading has succumbed to broad USD buying in early NorAm, falling back below 1.3900 to 1.3880. nL1N2KM140

Comments by the Fed's Bullard nW1N2JO05H, touting higher U.S. growth and inflation, coupled with higher U.S. Treasury yields are providing a boost to the dollar after a series of weak data points recently.
In any event, despite today's GBP/USD retreat from its highs, sterling bulls remain in control eyeing further gains versus the USD and EUR.

Sterling's move back within weekly and monthly Bolli envelopes (1.3922 & 1.3886) is likely a minor setback for bulls who seem intent on regaining 1.4000.
GBP/USD finds support at its 10-DMA by 1.3791, and despite several flash moves below the 30-DMA, now at 1.3696, the 30-DMA has underpinned the GBP/USD price higher since the November 2020 lows in the low 1.29's.

Meanwhile, GBP/USD IMM positioning also favors continued GBP strength as specs add to underweight positions amid recent lightening versus the euro and yen.

In any event, today's sterling selloff, ahead of 1.40, hints at what is likely to be a significant defense of that level by dealers with major interest in protecting it. nL1N2KM0CK

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Source:
Refinitiv IFR Research/Market Commentary

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