ExchangeRates.org.uk - Bank of America (NYSE:BAC) (BoA) considers that the latest Pound to Dollar (GBP/USD) exchange rate surge has broken the long-term downtrend that has been in place since 2008. If sustained, this potentially points the way to 1.3640, the tough 1.40-1.42 resistance band, and a possible long-term target of 1.4480.
Bank of America noted in July that GBP/USD had been in a secular downturn since 2008 and pointed out that GBP/USD had made three attempts to break this downturn over the past 18 months without success. GBP/USD has made a further run over the second half of August and, according to BoA, the pair has now broken the downtrend with a convincing move above the 1.28-1.29 area and posting 13-month highs just above 1.32. The 200-day moving average is currently at 1.2850 and BoA considers that a few weekly closes above this level would reinforce the more positive outlook.
BoA had noted previously that excessive long positions were a potential stumbling block for the Pound, especially with a surge to a record high above 140,000 contracts in late July. The immediate threat subsided in August, although the latest data registered a fresh increase in long Pound positions to above 67,000 which could limit the scope for further buying.
This content was originally published on ExchangeRates.org.uk
