GBP/USD worryingly close to 200-DMA
This morning’s GDP revision is unlikely to provide much excitement, leaving sterling still struggling with the impact of Mark Carney’s report this week and the unemployment data from Wednesday. Ultimately it seems that interest rate expectations have been noticeably pegged back, thanks to a more dovish than expected Mr Carney and wage growth data that didn’t actually show any growth.
GBP/USD could be approaching a ‘bounce or bust’ moment, given its perilous position barely 0.1% above the 200-DMA. Sterling watchers will look to what happened to EUR/USD when it breached this indicator – the currency pair hasn’t really looked back.
The $1.6630 level and then $1.6570 would be areas to watch for support should the 200-DMA be lost, but any bounce needs the daily relative strength index to move out of oversold territory to have any hope of rallying.
On the hourly chart the textbook downtrend remains in place, with yesterday’s low around $1.6660 being the area that may provide some support. However, we’ll need to see a move through the major hourly moving averages, together with a turnaround in the hourly RSI, which is busily dropping back from the highs seen yesterday.