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1 Jul 2015
GBP/USD: Weakness persists, breaks below 1.57
FXStreet (Bali) - GBP/USD saw a round trip on Tuesday, initially boosted towards 1.5770 after finding committed buyers off 1.57, but the London fix led to a sharp slide backk down towards those bids at 1.57, first hlding the price, however further selling just hit the GBP, and amid thin-liquidity in early Asia, the pair has hit a weekly low of 1.5683 now.
Smart money still behind GBP appreciation
Open interest spiked higher during last week's COT report. Large specs increased more on the long side, which led to a decrease in total shorts. Ccials were obviously sellers after the steady rise last week, while Lev fund longs doubled those that went short (+10k contracts difference). Meanwhile, dealer short positions went up considerably, these type of accounts act as net hedgers, providing evidence of new demand channels being made available, which should be interpreted as supportive for the Cable. Asset Managers also increased longs substantially.
GBP/USD technicals
Valeria Bednarik, Chief Analyst at FXStreet, notes: "The British Pound continues to trade range bound against its American data, despite encouraging UK GDP figures: the economy grew more than initially estimated, up to 0.4% from previous 0.3% in the first quarter of this 2015. The pair surged briefly up to 1.5774 on speculation that negotiations resumed in Europe, but was unable to sustain gains above the 1.5750 Fibonacci figure."
Valeria adds: "In fact, the pair has posted a lower high daily basis, suggesting selling interest on advances is still strong. Technically, the 1 hour chart shows that the price hovers around a flat 20 SMA, whilst the technical indicators show no directional momentum in neutral territory."
"In the 4 hours chart, the technical picture is also neutral, as the technical indicators are unable to move away from their mid-lines. The critical support continues to be 1.5645, the 38.2% retracement of the 1.5189/1.5929 daily run, and it will take a break below it to confirm a new leg lower, towards the 1.5550 price zone, 50% retracement of the same rally", the Analyst concluded.
Smart money still behind GBP appreciation
Open interest spiked higher during last week's COT report. Large specs increased more on the long side, which led to a decrease in total shorts. Ccials were obviously sellers after the steady rise last week, while Lev fund longs doubled those that went short (+10k contracts difference). Meanwhile, dealer short positions went up considerably, these type of accounts act as net hedgers, providing evidence of new demand channels being made available, which should be interpreted as supportive for the Cable. Asset Managers also increased longs substantially.
GBP/USD technicals
Valeria Bednarik, Chief Analyst at FXStreet, notes: "The British Pound continues to trade range bound against its American data, despite encouraging UK GDP figures: the economy grew more than initially estimated, up to 0.4% from previous 0.3% in the first quarter of this 2015. The pair surged briefly up to 1.5774 on speculation that negotiations resumed in Europe, but was unable to sustain gains above the 1.5750 Fibonacci figure."
Valeria adds: "In fact, the pair has posted a lower high daily basis, suggesting selling interest on advances is still strong. Technically, the 1 hour chart shows that the price hovers around a flat 20 SMA, whilst the technical indicators show no directional momentum in neutral territory."
"In the 4 hours chart, the technical picture is also neutral, as the technical indicators are unable to move away from their mid-lines. The critical support continues to be 1.5645, the 38.2% retracement of the 1.5189/1.5929 daily run, and it will take a break below it to confirm a new leg lower, towards the 1.5550 price zone, 50% retracement of the same rally", the Analyst concluded.