GBPUSD – Cable Facing Test of Prior Key Support

A combination of sterling weakness and dollar strength over the last few days has driven cable back towards 1.41 at a time when it was showing signs of finally gathering some upward momentum.

The pair now faces a test of its renewed weakness, with 1.4050-1.41 representing a region that it has so far this year found to offer decent support. In the brief period that it did trade below here, this area also became resistance for the pair.

GBPUSD Daily

A move below this zone would matter for two reasons. Firstly it would break the combination of higher highs and higher lows (albeit only one of each) that initially pointed to a possible period of bullishness in the pair.

Second, a move below the most recent low could open up a move back towards 1.3835, the low from the end of February.

A failure to break below here may indicate that it has once again been established as an important support zone for the pair, with resistance possibly being around last week’s highs, around 1.45.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.