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Analysts at Citibank, point out that near term, USD positioning is outright short and part of last week decline may also be driven by month-end rebalancing, suggesting room for some further consolidation before selling resumes. They look for GPB/USD to consolidate in the short-term.

Key Quotes:

“The UK’s fiscal response to the COVID-19 outbreak is already by far the country’s largest in modern peacetime history. Given the level of issuance on the horizon, in conjunction with the reluctance of the MPC to provide significant additional QE, the Gilt curve may come under persistent upward pressure over the medium term. Higher yields caused by increased fiscal risk will likely weigh on the Pound. We also expect the UK to lag behind many DM countries throughout 2020-2021.”

“GBPUSD has closed above the 200 day MA at 1.2701, the March breakdown point at 1.2726 and the 76.4% pullback level at 1.2778. This opens up the way for extended gains towards the 09 March high at 1.3200. However, GBP is closed to the top of the channel around 1.3021. The 76.4% pullback comes in at 1.3018 and on a daily chart it is at the most overbought level since 2010. Thus, GBP/USD may consolidate in short term.”