British Pound: Rebound advances towards upper end of range – Societe Generale

GBP/USD’s recovery above its 200-DMA after bouncing off the bottom of its multi-month range points to the possibility of further gains, according to Societe Generale strategists. The bank identifies initial support around 1.3420 at the 200-DMA, while resistance lies near 1.3555/1.3600 and 1.3660. Ahead of the Bank of England (BoE) decision, Cable traded in a consolidation pattern overnight near a seven-week high.

Bulls regain ground as range floor holds

"GBP/USD defended the lower boundary of its multi-month range at 1.3200/1.3140, resulting in a rebound. The pair has now reclaimed its 200-DMA, highlighting the possibility of an extension in the recovery."

"The next potential hurdles are located at projections of 1.3555/1.3600 and the upper boundary of the range at 1.3660, which could be a crucial resistance. The 200-DMA, currently around 1.3420, is the first support."

"Cable consolidates at 7-week high near 1.35 ahead of BoE, +25bp anticipated and 6-3 split could trigger p/t. Support 1.3420, resistance 1.3600. EUR/GBP steady around 0.8350, support 0.8320 and resistance 0.8370."

"The cut-off period for the updated growth and inflation forecasts was October. The bank is locked and loaded to tighten by 25bp and hoist bank rate to 4.0%. Cheaper oil gives Governor Bailey the opportunity to lean against market pricing of two additional hikes next year which could spur profit taking in GBP/G10."

"A unanimous 9-0 vote would be a hawkish surprise and could spur another round of short-covering and potentially deflate EUR/GBP to a new cycle low."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)