GBP/USD room for a drop to 1.2551 – Commerzbank

Cable faces risks of testing the key 200-day sma in the mid-1.2500s, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.

Key Quotes

“The market has executed a 50% retracement (1.2579) and is currently bouncing from here. There is scope for an extension to its 200 day ma at 1.2551, but we note the daily RSI has diverged and this reflects a loss of downside momentum. The market stays directly offered below its 20 day ma at 1.2798 and 55 day ma at 1.2822. The previous range 1.2775-1.3060 should now act as formidable nearby resistance. Below the 200 day ma would allow for losses to extend to the 1.2511 9 month support line and 1.2468/61.8% retracement. There is potential for the 1.2366 the 10th April low”.

“The rally will find initial resistance offered by the range above 1.2775/1.2818. But only above 1.3060 would target the 1.3446 September 2016 high”.