GBPUSD needs to hold above key support to avoid a top, says David Sneddon and his team at Credit Suisse.
Sneddon says the 1.2831 level, which is the early month pivot low, is likely to be tested and needs to hold if GBPUSD is to turn higher again (see Chart). Resistance is currently at 1.2926/31, with a break above 1.2950 needed to retest the recent high at 1.2991. A break above here would bring the September 2016 highs at 1.3059 and 1.3121 into view. However, Sneddon warns that a bigger obstacle remains at 1.3255, which is the 50% retracement of the June to October 2016 decline.
According to Sneddon, near-term support is at 1.2899, then 1.2877. Below 1.2831 would set-up a small top, with the expectation of further downside to the late March low at 1.2759/54, which is also the 38.2% retracement of the April to May rise.