A major obstacle to further downside is also the S2 monthly pivot at 1.2118, and this would have to be breached for us to have confidence of the bear trend extending.
A positive rise in exports compared to imports helped push Sterling higher on Friday morning and enabled it to shrug off exceptionally poor Manufacturing data.
The Pound rose by 0.3% against the Dollar and the Euro during the budget as investors took confidence from the Chancellor’s upbeat tone and bullish revisions to growth forecasts for the current year.
Pound Sterling retains a negative bias against the Dollar and the Euro with another leg lower in the currency complex being sparked on the back of the release of data which showed a further slowdown in high-street retail sales as shoppers cut spending, especially on non-essentials.
UK government bonds, also known as gilts, should start to yield more as the economy remains stable and inflation expectations build, says the chief economist at advisory service Capital Economics, Jonathan Loynes.
The Pound to Dollar exchange rate, or “Cable” as it is known amongst traders, is vastly overvalued and therefore a prime candidate for selling, says J P Morgan strategist Paul Meggyesi in a recent note seen by Pound Sterling Live.
GBP/USD lost ground last week as the Dollar rose on the increasing likelihood the Federal Reserve will raise interest rates in March thus stimulating foreign capital inflows.
A leading survey of manufacturing sector purchasing managers in February showed a mild pullback in results as activity lost some momentum, however, economists do not seem concerned, retaining a broadly optimistic long-term outlook.
Assuming a conservative target expectation, it will probably at the very least reach the 1.2770 range highs, which would provide an initial target for the pair.
“While prices remain trapped in their current range, we are getting to a window of opportunity for a breakout to develop, so we are watching price action closely today," says Lloyd’s Bank’s Robin Wilkins.
In a contrast to the general view that the Dollar is going to continue rising and that the Pound is doomed, Nordea Markets' Aurelijia Augulyte is retaining a bullish GBP/USD stance.
GBP/USD continues exerting pressure on 1.2415 where both the 50-day moving average and the monthly pivot are situated and provide a tough barrier of support limiting further declines.