GBP/USD
Tuesday’s powerful gains dominate the background to CABLE trading. Yesterday's modest decline was the 2nd profit taking day but the setback has only corrected half of Tue’s net upside. The daily Keltner channel remains trending positively and the 13 day average also reflects the tone but intraday sentiment is negative.
These conflicting signals means the forecast has to be a cautious one but is Temporarily Bearish below 1.6960. The immediate objective is 1.6908 and a move through that point should see the market focusing on 1.6884 or even 1.6865, Tue’s low.
The risk above 1.6960 is to 1.6975, yesterday's top, and 1.6996, this week's peak.
EUR/GBP
EUR/GBP saw volatile trading yesterday with a strong initial rise failing above the 13 day avg and a Marabuzo line from Apr 29th. This then translated into a powerful decline that took the cross to the most negative levels traded for 3 months. Despite oversold extremes and the proximity of a 62% correction point, there is no sign yet that the negative tone is exhausted.
So our call is Bearish but to leave room to Sell a Rally to 0.8192. The risk is 0.8211, the 13 day avg, with an immediate target of 0.8158, this year’s low, followed by 0.8141 and 0.8129.
GBP/JPY
An “outside day” on Wednesday, where the market posts a higher daily high & a lower daily low, left yesterday’s signals for GBP/JPY mixed and neutral. However, investors sold the cross exactly at 172.87, a 62% recovery to May’s losses, sentiment deteriorating by 1 Big Fig from the day’s high. Although this may be confirming the bearish weekly view, prices are little changed overall and signals aren’t strong.
They do keep a negative bias though, so with this in mind the outlook for Friday is to sell on the open and at 172.30, with a stop loss at 172.99, this week’s high. Targets are to 171.87, yesterday’s low, 171.26, last week’s base and 170.77, the 100 day average rate.