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GBPUSD: bulls should be cautious
Forex
09/24/2018

GBPUSD: bulls should be cautious

The pound staged an impressive recovery yesterday, though trimmed intraday gains consequently. GBPUSD continues to move north on Thursday, but remains below the key 1.30 handle

The pound staged an impressive recovery yesterday, though trimmed intraday gains consequently. GBPUSD continues to move north on Thursday, but remains below the key 1.30 handle so far. The sterling has regained the upside impetus due to a weaker dollar demand coupled with Brexit news.

Positive Brexit headlines from Germany have inspired the bulls and partially eased concerns over a no-deal divorce, which spurred sterling buying after four days of decline. The technical picture has improved as a result, and the easing demand for the greenback also helps.

Nevertheless, bearish risks are still there for the cable as Brexit issues are not resolved yet, while the buck may yet regain strength in the nearest future as Trump is about to announce fresh tariffs on China exports and thus make safe havens attractive again, after a short period of stabilization.

As such, the pound bulls should be cautious in the current recovery which could reverse abruptly should the risk aversion reemerge as sterling remains very sensitive to risk sentiment, and the greenback receives a decent support from the trading wars in general. In a negative scenario, GBPUSD could get beck below 1.28 after a dip under the 20-DMA at 1.2850.

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