GBP snapped a two-week advance against the US dollar - BBH

Research Team at BBH, notes that the Sterling snapped a two-week advance against the US dollar as it lost a little more than 2% against the dollar last week.

Key Quotes

“It held up a little better than the euro (~ -2.4%).  This also underscored the sense of it being a dollar move.  The US premium over the UK on two-year money (~86 bp) appears to be the largest in the quarter of a century that Bloomberg has data.  Sterling finished last week below its 20-day moving average (~$1.2365) for the first time since November 1.  It is poised to test the congestion band seen between $1.2160 and $1.2260.  

Sterling may be more interesting against the euro than against the dollar.  The euro recorded an outside day against sterling, though failed to generate a stronger reversal signal by closing above the previous day's high.  Still, the lows had been seen the euro nearly complete a 50% retracement (~GBP0.8510) of its post-referendum gains.  The technical indicators confirm a low may have been approached.  The RSI is curling higher, while the MACDs and Slow Stochastics look about to turn. While Eurozone politics are an important factor, May is expected to mount a rigorous defense of her royal prerogative, perhaps on the same logic that did not require Brown from submitting the Lisbon Treaty to Parliament.  Initially, resistance is seen near GBP0.8645 and then maybe GBP0.8720.”