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The GBP/USD pair witnessed a dramatic turnaround on the first trading day of 2021 and retreated over 160 pips from the 1.3700 mark, or fresh 32-month tops. The cable was last seen trading around 1.3570 and analysts at Commerzbank expect to see a dive towards 1.3540/1.3483 as negative divergence points to a possible retracement lower.

Key quotes

“GBP/USD nearly reached the 1.3712 February 2018 low by so far rising to 1.3705 before forming a key day reversal yesterday. Since the 1.3705 high has also been accompanied by negative divergence on the daily RSI we expect the 1.3540/1.3483 September and early December highs to be revisited. Further down sit the 1.3350 late December low, the 1.3189 December 21 low and also the 1.3135 December trough.” 

“Only a rise above 1.3712 on a daily chart closing basis would push the 1.3836 February 2016 low to the fore. Longer-term, the 2018 peak at 1.4377 is being targeted.”

“Overall, upside pressure should be maintained while the cable remains above its December low at 1.3135.”