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Following recent price action, Cable could now be looking to a potential test of the 1.3040 area, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.

Key Quotes

GBP/USD‘s near term rally was short lived and remains on the defensive following last week’s rejection of 1.3362, the 23.6% retracement of the move down from the April peak. The Elliott wave count is indicating that this was the end of the corrective move higher and our attention remains on the 1.3040 October 2017 low. Below 1.3040 would target the 50% retracement at 1.2918. Below 1.2918 would be treated as the break down point to 1.2580, the 61.8% retracement from 2016″.

“Above 1.3363, the 9 th July high would imply a deeper corrective phase to the 1.3470/1.3500 area and there is scope for the 1.3588 200 day ma (although this is less favoured)”.