- An extremely erratic tone for global equities and to a lesser extent for the US Dollar since early May, shifting back and forth from “risk off” to “risk on” phases through the Fed, US Employment report and developments since the weekend on US-Sino trade negotiations and tariffs.
- This has left the US$ indecisive in the very short-term, BUT a key theme through this uncertain stage has been a strengthening of Sterling (GBP).
- The GBPUSD Forex rate has seen a strong advance from late April through early May, driven by optimism of a Brexit agreement between the Conservative and Labour parties, to see the threat higher to target a key technical resistance level, at 1.3196.
GBPUSD risks stay higher
A grind lower Monday just below 1.3104 support but holding exactly at our 1.3080 support level, leaving a positive bias from last Friday’s very aggressive advance through multiple resistances (including the 1.3130/33 area), to keep risks higher for Tuesday.
The latter April probe below 1.2947 signalled an intermediate-term Double Top pattern and set an intermediate-term bear trend, BUT risk is now for a break above 1.3196 for an intermediate-term bull shift.
- We see an upside bias for 1.3155, 1.3177 and key 1.3196; break here aims for 1.3269.
- But below 1.3080 opens risk down to 1.3021, maybe 1.2986.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.2771.
- Lower targets would be 1.2437, 1.2366 and 1.2109
- What Changes This? Above 1.3196 is needed to shift straight to a bull theme.
4 Hour GBPUSD Chart