The Sterling is trading into a triple top against the dollar, and on it’s way to a well-confirmed yearly supply zone. The trend in Sterling has been week, and yesterday’s reversal to 1.6128 is a key indicator that the movement up is looking shaking.
The Sterling’s strength was primarily contributed to the assumption that Bank of England (BoE) Governor Mark Carney would increase rates, but it is less likely to happen anytime soon as the United Kingdom’s recovery is still shaky. Additionally, former BoE policy maker Adam Posen believes that the United Kingdom GDP figures would come in below expectations going forth.
The yearly daily chart is showing a well confirmed supply zone starting at, roughly, 1.6250. The GBPUSD is currently trading at 1.6122. A push into this zone with little momentum will create selling pressure. The trend strength on the daily chart is weak, ADX print is 13 with a +DMI reading of just over 20.
The nine month daily chart shows a closer look at where the pound is trading against the green back. A selloff should find near-term support at the 20 EMA, at 1.6117. However, further weakness will drop the Sterling to a broader support area sub-1.60.
Look for the pound to trade higher on general dollar weakness into the supply zone, failure to break out of this zone to the topside could be dangerous for pound bulls.