GBP/USD: bearish view
It seems that GBP/USD has finally started the bearish correction after its impressive 700-pips surge. Yesterday the cable touched a fresh three-month high of $1.5735 and closed above the $1.5700 barrier (200-day SMA). However, this resistance area seems to be a hard nut to crack for the buyers: on Friday cable dropped to $1.5615, breaking below the May-June support line. Friday’s data showed UK construction output contracted by 6.5% m/m and 1.1% y/y.
According to Commerzbank, cable is now ending the corrective move higher. A break below $1.5490 (June 7 low) will signal a slide back to the 55-day MA at $1.5335 en route to $1.5045. In line with this view, Commerzbank maintains GBP/USD short from $1.5600 with stops above $1.5705 and a target at $1.5050.
Credit Suisse agrees on the bearish view: they sold the cable from $1.5685 with an initial target at $1.5440.Their next bearish target lies at $1.5380.
In the US session pay attention to the industrial production figure and to preliminary UoM consumer sentiment at 13:15-30 GMT (both forecasts are upbeat). Strong data are expected to push the cable lower.
Chart. H4 GBP/USD