GBP/USD Technicals – 1.60 Holding, For How Long?
After the strong rally on 23rd Nov, Cable has been comfortably trading within 1.60 – 1.605 range. Currently price looks to test 1.60 once again with Yesterday's Low and L3 acting as support against such a move.
From the Daily Chart, we are looking at a downtrend since Mid Sep. Zooming out further, it appears that price has been moving in an oscillating fashion, despite etching out Higher Highs and Higher Lows since 1 year ago.
Also, UK's 10 year Gilts yields has widen against US 10 year Treasuries, showing that Market is pricing in a higher risk premium against UK, which is never good news for the Sterling. Should price enter back into the 1.54 – 1.60 consolidation (found between Feb – April 2012), we could potentially see an acceleration towards the 1.54 level, with 1.575 acting as interim support.
Of course, with US economy being highly unstable (see: fiscal cliff), we could yet see a bout of weakness in the Greenback which may propel Cable higher and other currencies once more.
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