FX levels to watch – GBP/USD, EUR/GBP, AUD/USD

The pound is racing higher versus the dollar and the euro, while the Aussie has nearly reached key support. 

Dollar and pound notes
Source: Bloomberg

GBP/USD highest since October

It certainly was an interesting day for GBP/USD yesterday. A huge spike took the price to its highest level since early October. It seems that more gains are likely, particularly since the market remains fundamentally short sterling.

The upside targets on a longer-term view become $1.3058 and then $1.3427, and while we may see some of the sharp upward move unwound, it looks like potential support will develop around $1.2775 and $1.2706. 

EUR/GBP pushed up by uncertain French election

The sharp drop in EUR/GBP since the March high has gone relatively unnoticed, but with the French election looking tough to call, euro weakness and sterling strength have combined to push the pair back to £0.8304, last seen in mid-November.

A break below here opens the way to £0.8251 and then £0.8117. We can expect some resistance to materialise around the £0.85 level, and then at £0.8550.

AUD/USD facing big drops

Heavy declines over the past two days raise the prospect of another test of the $0.7495 area. This was key support earlier in April and also in early March.

A break below here suggests a move to the April low at $0.7473, but below this we would have to look to $0.7364 and $0.7310. Meanwhile, any intraday rally has to break $0.7562 and then $0.7610 to put AUD/USD on a more bullish footing. 

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