Technical Analyst, Saxo Bank
Summary: Sterling is facing potential massive weakening against USD and EUR. GBPUSD rejected at 1.2445 and seems to be unfolding a double top pattern with potential to 1.12 area
EURGBP broke above key resistance and is now looking at 0.90 possibly 0.92
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Today's Market Quick Take from the Saxo Strategy Team
GBPUSD the resistance at 1.2445 seems to be too strong for GBPUSD to break and sellers have now taken control. GBPUSD is testing the lower rising trendline and is likely to break below. If it does there is no strong support until around 1.1840 but 200 and 100 daily moving averages will provide some support.
A close below 1.1840 will confirm a Double Top pattern unfolding with downside potential to around 1.1145 support illustrated by the two vertical arrows.
For GBPUSD to demolish the scenario a close above 1.2445 is needed.
Medium term: GBPUSD was rejected at the cloud and is forming a Evening Doji like pattern which is a indication of a top and reversal.
A weekly close below 1.1840 medium-term bear trend has resumed. Weekly RSI has been rejected at the 60 threshold twice now i.e., it is resuming negative sentiment.
the potential Double Top target is close to the 0.618 retracement of the massive bounce in Q4 2022.
EURGBP Closed yesterday above resistance at around 0.89 confirming uptrend with short-term potential to 0.90. where it will find some resistance and the 1.618 projection of the latest correction before the break out.
For this bullish scenario to be reversed a close below 0.8720
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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.