GBP/USD: reversal complete?
Sterling keeps depreciating versus the US dollar for a third day in a row after Fed’s Chairman Ben Bernanke said yesterday US could next year end asset purchases program.
GBP/USD dipped by more than 200 pips following the announcement and touched a two-week low at $1.5415. The decline slowed after strong UK retail sales data (+2.1% vs. previous -1.1%), but recovery remains capped at $1.5485.
Given the improved prospects of the US dollar, we remain bearish for the pair. Drop below $1.5400/5375 area would completely confirm the reversal. Resistance is seen at $1.5490/5500, $1.5570 and $1.5600. According to Barclays analysts, sterling’s failure to extend its advance after rising above its 200-day MA signals that its winning streak came to an end.
Chart. H4 GBP/USD