Oct 7 (Reuters) – Sterling needs to close above 1.3000 soon to avoid a heavier bout of profit- taking and a bearish breakout. GBP/USD was rejected three times in September in and around 1.3000 and Tuesday saw a fourth failure.
Back-to-back bear months are possible, and a fourth GBP/USD weekly close below both 1.3000 and the 200-week moving average.
The pound has been flip-flopping within a broad 1.2676 to 1.3007 range since peaking at 1.3481 in August and slumping through early September.
Brexit headlines, U.S. stimulus and election uncertainty plus fresh coronavirus restrictions for the UK have strangled direction for GBP/USD. As some key factors near their zenith, sterling could be ripe for a breakout.
Charts show the risk is heavily skewed to the downside. A weekly bearish continuation pattern, if it plays out, has a bearish projection of around 1.2100.
If sterling is to defy the technical signals, it needs to close above 1.3079, a key 50% Fibonacci retracement off the 1.3481 to 1.2676 Sept. 1 to 23 drop.
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GBP/USD daily candle chart:https://tmsnrt.rs/3lm7V94
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.