Technical Analyst, Saxo Bank
Summary: GBPUSD taking out resistance level but still facing headwind. Is this the last exhaustive move higher?
EURGBP range bound. Medium-term still up but 0.90 seems to be a struggle to break
GBPUSD has taken out resistance at around 1.2445 trading in a steep short-term rising Channel/ Wedge. GBPUSD seems set for a move to next resistance at around 1.2666
That upwards move could be a last exhaustive move higher. Weekly chart 200 and 100 Moving Averages are coming down with the 100 having crossed over the 200 Moving Average also known as a Death Cross which will limit the upside potential. However, a spike up to the 0.618 retracement at around 1,2745 should not be ruled out. And the pair is in an uptrend.
For GBPUSD to reverse the uptrend: Short-term a close below lower rising trend line but there is strong support at around 1.2175. A close below that level could jeopardizer the medium-term uptrend which will be reversed by a close below 1.18
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.