Macro: It’s all about elections and keeping status quo
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.
Technical Analyst, Saxo Bank
Summary: GBPUSD rejected at key resistance at 1.2666 and is ripe for a correction. Possibly down to 1.2345.
EURGBP breaking key support that could lead to a move to 0.8575.
GBPUSD rejected at key strong resistance at around 1.2666. RSI divergence indicating a correction could unfold.
The is rising trendline offer some support where GBPUSD could bounce from but a break below is likely to lead to a sell-off down to the 0.382 retracement at around 1.2345.
However, if buyers can push GBPUSD to close above 1.2666 a 1.618 projection move to 1.2846 could be seen, possibly with a spike up to 1.2940 – see weekly chart
EURGBP has broken below support at 0.8716 and is set to drop lower. The 0.8720 support is also the horizontal trendline in a descending triangle like pattern EURGBP has formed over the 3-4 months.
RSI below 40 threshold support the bearish picture with no strong support until around 0.8575
On the medium-term (weekly chart) EURGBP is breaking below its lower rising trendline testing the 200 weekly Moving Average which is declining. 55 Moving Average will offer some support but a bearish move to around 0.8575 is in the cards.
The RSI divergence indicates a correction but RSI. If RSI weekly closes below 40 it will show negative sentiment further adding to the bearish picture.
For EURGBP to reverse this bearish scenario a break above 0.8875 is needed.