Most major currencies have weakened against the US dollar in the last month and, although some of them have recovered a little, GBP look likely to remain weak for some time, according to Cornelius Luca, Global Chief Technical Analyst at Thomson Reuters.
Luca points out that GBP/USD remains ‘heavy’ at a near seven-year low and is trading below its sliding 21-day exponential moving average. “This is the second time in the latest leg of the downward trend that it has resumed its decline after a shallow 3-day recovery.” Fast stochastics are slightly bullish but MACD is bearish. As such, Luca suggests going short GBP/USD while it remains below its 21-day exponential moving average.
Initial support is at 1.4079 with further support at 1.3955 and 1.3825. Initial resistance is at 1.4360 with further resistance at 1.4420 and 1.4490.