Sterling surges broadly in quiet holiday trading today, in particular against other European majors. GBP/CHF resumes recent up trend by breaking through last week’s high of 1.3059. Rise from 1.1683 is seen as the third leg of the whole up trend from 1.1102. Next target is 1.3310 medium term resistance, and then 161.8% projection of 1.1102 to 1.2259 from 1.1683 at 1.3555. Break of 1.2998 minor support will bring some consolidations first. But outlook will stay bullish as long as 1.2769 support holds.
EUR/GBP also accelerates downward to as low as 0.8470 so far. Current fall from 0.9291 is seen as the third leg of the pattern from 0.9499. Deeper decline would be seen to 0.8276 support next. We’d look for bottoming signal as it approaches this support. However, firm break there will carry larger bearish implications, and could pave the way to 100% projection of 0.9499 to 0.8670 from 0.9291 at 0.7950 in the medium term. Above 0.8532 will bring some consolidations. But outlook will stay bearish as long as 0.8644 resistance holds.
