The Big GBP/USD Recovery is Still Intact: LMAX Exchange

Exchange rate analysis

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- Sterling at a major support level vs. Dollar that is being tipped to hold

- GBP/USD won't visit post-referendum lows again

- Long-term uptrend intact, despite 2018 dip

It was a tough 2018 for the British Pound which opened the year at 1.35 and closed at 1.2750, representing a loss in value of about 6%.

However, we are told by one technical analyst that this decline is in fact actually a pullback in a longer-term trend of appreciation for Sterling.

"At this stage, we still view the pullback in 2018 as a correction within a developing uptrend off the 2016 low and will be looking for a higher low to carve out well ahead of 1.1840, in favour of a push back to the topside," says Joel Kruger, an analyst with brokers LMAX Exchange.

For this to play out, Kruger will want to see the market will hold above some meaningful support in the 1.2300s and recover back through the September 2018 peak at 1.3300.

"Critical short-term resistance comes in at 1.2815, with a break back above the level to strengthen the bullish prospect," says Kruger in a noted dated February 09.

LMAX on GBP to USD chart

Image courtesy of LMAX Exchange.

Robin Wilkin, a strategist with Lloyds Bank holds a similar view on the Pound-Dollar, saying the pair has put  in its multi-year lows already.

"Long term, we believe 1.1490 completed the bear cycle from the 2007 2.1160 highs. If this is the case we ideally need to see a higher low develop at or over the 1.21-1.20 region," says Wilkin.

However, Wilkin cautions that while broader technical studies are still constructive for this pair, for a move back towards 1.40-1.45, we need Brexit clarity.

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