23 Dec 2014
GBP/USD slippery slope? – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, explains that GBP/USD is still in the downtrend that has persisted since July, noting that this year’s low at 1.5542 is an important level to watch on the downside.
Key Quotes
“The dollar index yesterday reached its highest level for 6 years, driven by the recent soft tone of the EUR/USD and a widened differential regarding expectations for ECB and Fed monetary policy.”
“The strength of the USD has again pushed cable below the GBP/USD1.5600 level, though over the past month it has been consolidating around current levels.”
“Despite remaining largely range driven, from a technical point of view cable is closing in on some interesting levels. Cable is still in the downtrend that has persisted since July. The year’s low at 1.5542 is an important level to watch on the downside and below this a break below the 1.5500 low could suggest scope for another leg lower.”
“That said, technical indicators are also looking oversold and a break above the 1.5700 region would lessen the risks that cable will be dragged lower by USD strength.”
“Our central scenario suggests that cable will remain within a choppy range in the months ahead. On the assumption that EUR/USD heads lower, that implies that EUR/GBP will also soften.”
Key Quotes
“The dollar index yesterday reached its highest level for 6 years, driven by the recent soft tone of the EUR/USD and a widened differential regarding expectations for ECB and Fed monetary policy.”
“The strength of the USD has again pushed cable below the GBP/USD1.5600 level, though over the past month it has been consolidating around current levels.”
“Despite remaining largely range driven, from a technical point of view cable is closing in on some interesting levels. Cable is still in the downtrend that has persisted since July. The year’s low at 1.5542 is an important level to watch on the downside and below this a break below the 1.5500 low could suggest scope for another leg lower.”
“That said, technical indicators are also looking oversold and a break above the 1.5700 region would lessen the risks that cable will be dragged lower by USD strength.”
“Our central scenario suggests that cable will remain within a choppy range in the months ahead. On the assumption that EUR/USD heads lower, that implies that EUR/GBP will also soften.”