GBP/USD: bearish pressure persists
By Kira Iukhtenko
Despite the recent recovery of GBP/USD, the majority of analysts maintain a bearish view for the pair. The current descending channel remains active. For instance, Credit Suisse holds a SHORT position since January 11 from 1.4595, targeting 1.4405 and with a stop loss at 1.4650. Analysts at Morgan Stanley recommend selling GBP/USD on a sustainable break below the 1.4560 mark, targeting 1.3500 in the medium term. Stop loss is recommended to be set at 1.3500.
From the fundamental viewpoint, expectations for a BOE rate hike in the coming months are now pretty low amid the weak UK economic figures. Manufacturing production data on Tuesday disappointed to the downside. Meanwhile, the Fed is widely expected to hike in March. This means that policy divergence between the BOE and the Fed is widening. This is a bearish factor for GBP/USD.
Chart. Weekly GBP/USD