The GBP/USD continues to look bearish on the daily chart, having broken below the isolated pivot low of 23rd October in the last few days, and now looks set to test the platform of price support in the 1.5825 region. The primary driver for the move lower in Cable over the last few weeks has been sustained strength for the US dollar, which broke above a key level of price resistance on the daily USD index chart, breaching the 80 level, where the currency had remained waterlogged for several weeks. Since then, the US dollar has continued to move higher, sending the major currency pairs lower, and with the dollar now looking increasingly bullish, this is adding further pressure on the British Pound.
The key technical level for the pair was firmly established with the failures in the 1.6177 price region, with a series of isolated pivot highs adding clear definition to this level of price resistance, with the pair finally failing to breach this level in late October and pushing Cable below the psychological 1.6000 level once again. All of this bearish sentiment is fully reflected on the daily chart. Our trading indicator has been firmly bearish since early October, and in the last two weeks we have seen sustained selling volumes on the daily chart, which are now also mirrored on the three day chart with sellers out in force over the last few days. However, as outlined above, with plenty of price congestion at various levels below, we could see Cable find some much needed support in the 1.5825 area, with a further potential area of support in the 1.5700 region, should this fail to hold.
By Anna Coulling