GBP/USD Turned Sideways After Volatile Wednesday
has been restricting to a narrow range of 1.41-1.4140 post Fed minutes
release after having witnessed a sharp drop to 1.40 and a v-shape
recovery on Wednesday.
Volatility on the rise
Volatility is rising as every new Brexit poll is highlighting a narrowing gap between ‘remain vote’ and ‘exit vote’. Cost of hedging against a sharp drop in Sterling has soared to levels last seen during 2008 crisis.
As per Fxstreet analyst Ross Burland, “Brexit would be a nightmare for the old lady. As we approach the 23rd June, the pound will undoubtedly remain better offered, more so against the U.S. dollar than to the euro, and then if one is looking further afield than to just the short-term FX risk, to the contrary, it can reasonably be argued that for a long time now, Britain has enjoyed far too strong a currency anyway and although a weaker pound is not all doom and gloom in respect to net trade, there is plainly some danger of what may be a mildly beneficial sell-off turning into a rout.”
With no major UK data due for release today, the bearish mood around the currency is likely to make its presence felt once. However, bears need to be cautious as sudden V-shape recovery cannot be ruled out.
GBP/USD Technical Levels
The immediate hurdle is noted at 1.4146 (hourly 50-MA), above which the spot could target 1.4200 (hourly 100-MA). A break higher would expose hourly 200-MA at 1.4257. Conversely, breakdown of immediate support at 1.41 would expose 1.4079 (Jan 21 low) beyond which prices may have a relook at previous day’s low of 1.4005.
(Market News Provided by FXstreet)