GBP/USD: Downtrend persists, squeezes likely to be limited - Westpac

Tim Riddell, Research Analyst at Westpac, notes that GBP remains in a downtrend off 2014’s 1.7115 high and the post Brexit vote fall from 1.5015-20 is underscoring the downtrend, however, this trend is now becoming mature (at risk of basing at some point). 

Key Quotes

“Despite the longer term prospect of the downtrend maturing, falls from Nov.’s 1.2775 interim high could accelerate on a close below near term measured targets around 1.1890.”

“A squeeze above 1.2180 may reduce the current downside bias, but a close above 1.2315 is needed to suggest that a near term base may have formed.”

“If rebounds continue to falter in front of 1.2100, the risk of the downtrend becoming more dynamic will increase. A fall through 1.1985 could then trigger a slide to at least the interim targets in the  1.1860-90 area amidst risk of extending towards 1.1750-60 and 1.1670-75.”

“Conclusion: The downtrend is maturing but remains firmly in place.  Current bias is for declines towards 1.1750 and 1.1675 (possibly even 1.15).  A close above 1.2315 is needed to reduce current downside risks.”