GBP/USD Weekly Outlook

GBP/USD's consolidation from 1.4783 continued last week with another rise to above 1.5194 resistance. Initial bias remains mildly on the upside this week and further recovery could still be seen. But after all upside is still expected to be limited by 38.2% retracement of 1.6456 to 1.4783 at 1.5422 and bring fall resumption. Break of 1.4880 support will argue that whole decline from 1.6456 is resuming for next target of 200% projection of 1.6875 to 1.5829 from 1.6456 at 1.4364.

In the bigger picture, there is no change in our bearish view. That is, medium term rebound from 1.3503, which is treated as a correction to down trend from 2.1161, has completed at 1.7043 already. Fall from there is tentatively treated as resumption of the down trend from 2.1161 and should target a new low below 1.3503. On the upside, break of 1.5814 resistance is needed to invalidate this view. Otherwise, outlook will remain bearish.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Rebound from 1.3503 should have completed and the whole fall from 2.1161 is likely resuming for 61.8% projection of 2.1161 to 1.3503 from 1.7043 at 1.2310 next.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box