Geopolitical concerns leave sterling bulls frustrated again by 1.27
Geopolitical concerns provided a new reason for sterling to falter at familiar resistance on Tuesday, leaving it vulnerable to a return to at 1.2598.
GBP/USD failed to hold within its Bollinger envelope, faltering at resistance for a third session near 1.27 as fears over Russia's new nuclear doctrine fueled a safe-haven dollar bid.
Though fueled by a sudden adjustment in perceived geopolitical risk, the dip in GBP/USD indicates the path of least resistance and risks for GBP/USD are tipped to the downside.
With the Fed policy path seen more restrictive in the near-term and President-elect Donald Trump's trade policies and political appointments geared toward a higher USD and perhaps lingering inflation, GBP/USD is likely to remain on the back foot.
Technically, recent bearish crosses add to the offered tone for GBP/USD. Both the 30- and 10-DMAs have crossed below longer term daily averages, providing fodder for sales.
Sterling net spec long positioning may also be providing pressure on GBP/USD. As of Friday's IMM data release, sterling bulls added to longs. However, since the close of the last IMM period on Nov. 12 sterling has continued lower, likely causing recent and entrenched longs to exit.
With technical and fundamentals hinting at further downside risks, a close below support at 1.2598 is likely to create increased selling, putting the May 9 low at 1.2446 in sharper focus.
For more click on FXBUZ
GBP Chart: https://tmsnrt.rs/4fRn6mQ
(Paul Spirgel is a Reuters market analyst. The views expressed are his own)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
