The pound has been enjoying “safe haven” status from the Euro for a time, but the risk of persistent risk aversion here and a weak UK GDP print could mean further weakening in GBPUSD.
GBPUSD has managed to stay within a range in recent weeks, previously boosted by its safe haven status to the EU crisis and outperforming the USD due to a solid bid in risk appetite – until late last week, at least. While some of sterling’s status among the major currencies may still be determined by the status of the EU crisis, there were recent signs that some of its safe haven cachet is fading a bit, and today’s GDP may remind investors of the risk to the currency from . As well, if the recent bout of risk aversion keeps up, the USD will tend to outperform.
Chart: GBPUSD
The obvious next support level for GBPUSD comes in just below 1.5400, but it is the long term area down below 1.5300 that is particularly interesting, as the pair has been range trading between 1.5200 and 1.6300 for almost a year now. The outlook continues to suggest a break of that area and a test of 1.50 or beyond assuming we’re not headed toward a significant further recovery in equities. The very clear structural resistance lies up in the area of the 200-day moving average, with more tactical resistance perhaps at perhaps the 55-day moving average, which is falling back to the 1.5600 area.
John J Hardy,
SAXO BANK