Market News & Analysis
GBP/USD poised for further potential breakdown
James Chen December 4, 2014 2:06 PM
GBP/USD (daily chart shown below) continues to be weighed down in the face of renewed US dollar strengthening against major global currencies, and appears to be poised for a further breakdown.
Currently nearing the one-year low of 1.5584 that was just established earlier in the week, GBP/USD is firmly entrenched within a strong downtrend that has been in place for more than four months since the 1.7190 multi-year high in mid-July.
The sharp drop since July, which represents more than a 9% decline down to this week’s noted 1.5584 one-year low, has consistently traded underneath a well-defined downtrend resistance line as well the 50-day moving average.
Having recently consolidated in a bearish flag pattern, the currency pair has since made a slight break below that pattern, tentatively confirming a continuation of the current downtrend.
GBP/USD continues to trade with a strong bearish bias. Any further breakdown below the noted 1.5584 low would confirm a further continuation of the entrenched downtrend, with downside targets residing around 1.5400 and then 1.5250.
Any upside rebound in the near-term should be met by strong resistance around the key 1.5750 level and the noted downtrend resistance line.
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