GBPUSD Recovers from Lows But Still Under Pressure

The GBPUSD pair has broken through the strong support at the 1.40 region a couple of days back and it fell lower during the course of trading yesterday towards the 1.39 region. But as the day progressed, the pair managed to recover and is trading just below the 1.40 region as of this writing.

GBPUSD Lower

Though the recovery has been strong and it has come against the dollar, which otherwise has been one of the strongest currencies around, we have to view this recovery as a move that is a correction of the move lower rather than a change of trend. It is clear that the pair is in the control of the bears as long as the pair is below the 1.40 region and we are likely to see the region hold for the short term which should ensure that the move lower should continue. It is indeed a surprise for the pound traders who have been seeing the currency make a strong cae for itself over the last week and it appeared as though it would go from strength to strength.

But we had mentioned in our weekly forecast about the weekly chart in which it was clear that there was a double top and the prices had been rejected strongly from the top of the range. This set into motion the weakness in the pound and we have been seeing the effect of that since the beginning of the week. We expect this weakness to continue and this should push the pair towards the 1.38 region and that is the region where the bulls and the bears are likely to get cosy and feel comfortable in the short and medium term.

Looking ahead to the rest of the day, we do not have any major economic news or data from the US or UK and hence we can expect some consolidation below the 1.40 region. There might be a brief move above the 1.40 region but that is likely to be short lived.