Pound’s bounce comes to an end
Both $1.64 and $1.65 proved to be too much for GBP/USD on Friday, and this morning’s modest rise has so far been capped at the 20-daily moving average once again.
There is relatively little on the sheet for the pound in terms of UK economic data this week, although Bank of England governor Mark Carney is speaking on Thursday. There will be plenty of US data, hwoever, including PMIs, GDP and the Michigan confidence reading. Thus the theme of a strong dollar will still be dominant, with the US currency having the edge over others at present, particularly since worries over Chinese growth will diminish risk appetite.
As mentioned, today’s move has so far been halted by the 20-DMA, even if the daily relative strength index and MACD point to ongoing strength among buyers. Any move upwards targets the level $1.6430, where Thursday closed and Friday opened, and then on to the Friday high around $1.6530.
The downside scenario would involve an attempt to break $1.6250, and then the $1.62 level.