August 30, 2013 – GBP/USD (daily chart) has continued to fall back after having hit a two-month high at 1.5716 last week – just shy of the major 1.5750 resistance level – and then turning back to the downside. The resulting bearish retreat of the past week and a half has brought the currency pair back down once again to approach major support around the 1.5400 area, one of the most pivotal support/resistance levels for GBP/USD in recent weeks and months. The downward-sloping 200-day moving average also currently resides just under 1.5400 support. With significant downside momentum currently prevailing for the pair, and renewed dollar strength tentatively in play virtually across the board, a key bearish indication would be a breakdown below 1.5400 support. This event would confirm a further bearish bias for the pair, with initial downside support objectives residing around 1.5250 and then the key 1.5000 psychological level.
James Chen, CMT
Chief Technical Strategist
City Index Group
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