GBP/USD
Although the bulk of yesterday's trading saw GBP/USD consolidate after Tuesday’s strong gains, late buying interest confirmed the underlying tone. This move kept prices ‘hugging’ the top of a positive Keltner channel and underlined the support offered by the 13 day moving average.
Signals for sentiment remain at overbought extremes, providing potential for profit taking, but setbacks are likely to remain temporary. So our call is Bullish from the open but also to buy a dip to 1.6772.
The risk is 1.6743 and the immediate target is 1.6823, this year’s peak. A move above that level then targets 1.6853 or even 1.6882. The risk is a move below 1.6743, yesterday's open, indicating that buying pressure has reversed targeting 1.6725, yesterday's base.
EUR/GBP
The EUR/GBP failed to extend Tuesday’s losses yesterday and the move through the base of the Cloud. Instead, some buying interest developed although this was not strong enough to regain even half of the preceding day’s decline.
It is the weakness of the rally, coupled with Asian selling, that keeps the focus on the downside and so our call is Bearish from the open but also to sell a rally to .8257, yesterday's top.
The risk is 0.8273 with an immediate target of 0.8233, this week's low, then 0.8215, a 76% correction point, and 0.8189. The risk is a move above 0.8273 focusing on this week's 0.8285 peak.
GBP/JPY
Bearish signals for GBP/JPY on the week have initially been confirmed with losses of over 1 Big Fig. However, with the pullback attracting buyers towards 169.83, a 62% pull-back to the rally since last month’s low. More importantly, this is close to the 100 day average rate, yesterday’s forecast pointed to cautious gains.
The market did in fact improve, but trading in Europe was trend-less, prices remaining firmly inside Tuesday’s strong down-day. Investors have sold into the rally in Asia this morning, however.
Although signals aren’t strong, they have a bearish bias. So, with this in mind, the outlook for Thursday is to sell on the open below a stop loss at 171.64, today's high in Asia. Targets are to 170.57, 170.01, this week’s low and then to 169.55, the 28th March base.