GBP/USD: further declines expected to test 1.3000? - FXStreet

Valeria Bednarik, chief Analyst at FXStreet exlained that after hitting 1.3278, a fresh 3-week high, the GBP/USD pair sunk to 1.312, closing the week a handful of pips above this last, holding to modest gains weekly basis.

Key Quotes:

"The Pound has been outperforming most of its major rivals against the greenback, as macroeconomic data released over the last couple of weeks came in much better-than-expected, spooking the ghost of an economic collapse after the Brexit's victory in the EU referendum from late June. Although the risk to the economy is clearly big, the market is reconsidering its assessment of the consequences of the exit."

"Nevertheless, Pound's rally was also supported by a weakening greenback, but Yellen has changed this last, by hinting a soon-to-come rate hike, in quite a hawkish speech last Friday. Technically, the daily chart shows that the pair's advance stalled and reverted from below the 23.6% retracement of the post-Brexit slump at 1.3320, a major resistance, maintaining the pair in its 2-month range."

"In the same chart, technical indicators have turned modestly lower within bearish territory, while the 20 DMA heads modestly lower around 1.3000, indicating a limited bullish potential for the upcoming days. In the 4 hours chart, the 20 SMA and the 200 EMA converge around 1.3200, providing now a strong resistance, while technical indicators have settled near oversold readings, with no signs of downward exhaustion at this point, leaving doors open for further declines."