Currency Analyst since 2010

GBP/USD slid to $1.5600

GBP/USD rose yesterday to $1.5717, but then slipped to the $1.5600 area today. As we pointed out yesterday, pound was overbought, MACD showed divergence and we were at the upper edge of the rising channel, so correction was natural at that point. The reason for the move lower was the FOMC minutes which strengthened the expectations that the Fed will soon reduce QE. In addition, Bank of England’s Weale said he can envisage circumstance when further QE may be needed.

A daily close below $1.5635 would confirm that the rising wedge is broken to the downside and pound will be vulnerable for further declines. Still, there’s support at $1.5575/70, $1.5555, $1.5515 and $1.5500. For now there is not yet anything that confirms a stronger bearish movement. Below the latter, cable may fall to $1.5370 (support line of the upward channel, 38.2% Fibo of the advance from July low).

Chart. H4 GBP/USD

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