GBP/USD - Scope for rally to 1.3658/71 - Commerzbank

Commerzbank Analyst Karen Jones details the technical rationale behind a possible move higher in GBP/USD to 1.3658/71 levels.

Key quotes

GBP/USD is consolidating just below recent highs at 1.3614/58, made in September and January. We would allow for a small dip back, it has recently broken above the 2014-2017 downtrend and this has introduced scope to the 1.3658/71 September high and double Fibonacci retracement. The cross is bid above the 1.3300 level. Intraday dips lower should find initial support circa 1.3475/32.

Where are we wrong? The 1.3300 support guards the 1.3265 2014-17 uptrend – this represents the breakdown point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement.

Short-Term Trend (1-3 weeks): The 2014-2017 downtrend line has been eroded to target the 1.3658/71 double Fibo. Above here would target 1.3836 the February 2016 low.

Long-term trend (1-3 months): Bid above the 1.3264 2014-2017 uptrend.