Sterling slides over the weekend
GBP/USD has dropped in overnight trading as traders book their profits from last week’s surge. The upward trend that the pound has been in since the start of the month is showing signs of a correction.
This week is relatively quiet in terms of economic data for the UK. At 11am (London time) the UK CBI realised sales will be announced and the consensus is for a reading of 42. This compares with a reading of 39 in January, and should expectations be met it will trigger short-term buying.
The slightly hawkish comments from last week’s Bank of England report helped the sterling gain ground versus the greenback but the acid test will be the UK GDP estimate on Thursday, with the market expecting a reading of 0.5%. If the report comes in better than estimated it will give GBP/USD the next leg up in its upward trend.
GBP/USD is trapped between the 100- and 200-hour moving averages, at $1.54 and $1.5370 respectively. A move through $1.54 will bring the upside resistance at $1.5460 into play. If the pound drops below the $1.5370 mark, support will be found in the $1.5340 area, and if that mark is punctured then $1.53 will be the target.