GBPUSD Forecast: Danger below 1.31700

FX_IDC:GBPUSD   British Pound / U.S. Dollar
GBPUSD Forecast: Danger below 1.31700

GBPUSD lost 1.4%, the most in five months in response to the widely expected rate hike. The comments around the hike seemed particularly dovish.

With the GBPUSD testing the key support level of $1.3040, the market took a Friday breather after the US labour market report saw less than expected number of new jobs created in the US and wages stagnating in October.

We will have a week without an important data except never-ending Brexit negotiations process to provide substantial impulses for the market.

For the better part of the past six weeks, sterling has chopped between roughly $1.3000 and $1.3340. It tested the lower end of the range. At trendline connecting the June and August lows comes in just below $1.30 at the end of the week ahead. And 1.30300 is the Fibonacci 61.80%.If this level is broken, 1.28300 will be the target.

The technical indicators are mixed but do not seem aligned to favour a breakout. That said, the UK two-year premium over the US appears to have turned lower after widening by 30 bp from mid-September through BOE rate hike last week.

On the smaller chat time frames, we see 131200 and 1.31800 ( MA 50 ) levels as a resistance. Cable must make four hours closings above 1.31800 before targeting higher in short term.

I will publish my trade plan for premium members after Asia Opening.
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