The weakening in the GBP/USD on Friday was swiftly reversed following the US payrolls announcement, and the ensuing recovery has formed a positive “reversal day.” Credit Suisse economists expect the rebound to continue to 1.3931/40 and subsequently to the 1.4000/15 area.
“We expect the recovery from Friday to continue thanks to a strong daily RSI momentum divergence. Resistance is expected next around 1.3900, which if broken can give weight to our view for a move back to 1.3931/40, and then at the late June reaction high and 55-day average at 1.4000/15, which we see as more meaningful and tougher resistance.”
“While we would expect for a fresh cap in the 1.4000/15 zone for the time being, a breach would complete a base to further consolidate the rebound, with resistance next seen at the downtrend from the beginning of June, which is currently at 1.4052.”
“Support is initially seen around 1.3863, then 1.3837, with a break below 1.3818 required to shift the risk lower, with support next anticipated at 1.3777, then Friday’s low at 1.3734. The most critical support is still seen at 1.3669/48.”/n
