Although GBPUSD remains bearish in the longer-term (one month and beyond), its recent recovery is testing the 100-day moving average at 1.2520 and is likely to break it, according to David Sneddon and his team at Credit Suisse in London.
Sneddon expects GBPUSD to follow through any such break to test resistance at 1.2549 and then 1.2721/29. He says the bigger obstacles, however, are the high from December last year (at 1.2776) and the 38.2% retracement of the June to October 2016 decline (at 1.2839), which Sneddon thinks will probably cap the relief rally (see Chart).
Sneddon says support can be found at around 1.2410 and then 1.2370 and only a break below 1.2261/53 would curtail the immediate upside pressure. As such, his strategy is to stay long for a target of 1.2728, with a stop below 1.2253.