Pound Defends the Front-line at $1.25, Outlook Remains Supportive
The Pound to Dollar exchange rate continues bobbing up and down in a 75-pip range above 1.2500 and 1.2575.
The ability to defend the 1.2500 support zone is instructive on the near-term outlook and will provide confidence that Sterling will see downside against the Greenback limited over coming days
“It seems to have hit a platform of support at 1.2500 and now its rebounding,” said one institutional trader, who wished to remain anonymous.
The recent short-term uptrend lost momentum ahead of a major resistance zone between 1.2580 and 1.2610, as Donald Trump’s anti-Dollar rhetoric subsided during a holiday-quiet trading session. Most major world markets are closed in observance of Good Friday.
The exchange rate fell to 1.2500 but despite attempts it could not break lower.
This appears to be a key level.
“Bears would be eyeing for a decisive break through the 1.2500 immediate support, below which the pair is likely to accelerate the slide towards 1.2425-20 support area, with some intermediate support near 1.2480 horizontal level,” said FXStreet’s Haresh Menghani.
Sterling bulls hopes rose, however, after negative US data this afternoon showed US Retail Sales slumping helped facilitate a recovery in the pair.
“A rebound in cable cannot be ruled out amid lack-lustre US data and profit-taking. Also, low volumes and irregular volatility amid light trading could exaggerate the moves,” said Menghani.
A break above 1.2520 could be key to the pair resuming its uptrend, suggeted the FXStreet analyst.
“Momentum above the ascending trend-channel resistance near 1.2520 level is likely to lift the pair immediately to 1.2540-45 horizontal resistance ahead of 1.2575 (yesterday’s swing high). Any follow through up-move is likely to confront strong supply near the 1.2600 handle, representing a medium-term descending trend-line resistance extending from Oct. 2016 highs through 2017 high,” Menghani adds.
Japanese Candlestick Formation Confirms Further Support for GBP/USD
The Dollar rose on Thursday after the US Bombings in Afghanistan triggered a risk aversion which supported the Dollar.
A Japanese form of chart analysis called Ichimoku, or Cloud Chart analysis is positive for the pair on the four-hour chart.
The Tenkan-Sen and Kijun-Sen lines have crossed forming a bullish "Golden Cross".
The Ichimoku Cloud is heading up and the Chinkou Lagging Span – another line on the chart - is above the Cloud, which is also bullish.
The short-term forecast is therefore positive.
