September 21, 2021 15:25:47

Softer risk tone keeps GBP/USD offered

After trading down to its weakest in four weeks yesterday, GBP/USD looked to be clawing back some losses earlier today. But bearish momentum is still strong with the Bank of England unlikely to pivot to a hawkish stance on Thursday. On the other hand, the Fed may position for a taper announcement and revise its rate outlook upwards.

Cable struggled to push higher above 1.39 and the 100-day SMA in recent weeks. Prices traded around the 200-day SMA but the lack of any bullish momentum was evident in the daily RSI which couldn’t climb convincingly above 50. The bears have been in charge for four days in a row now with yesterday’s low at 1.3640.

The drop under 1.37 leaves us looking at a key support zone. The August low at 1.3602 comes in ahead of the July lows at 1.3571. The latter also tallies with a long-term Fib level of the May’20-June ’21 move. The next support below here is at 1.3483. Resistance after the 1.37 area sits at the early September low at 1.3726.

GBP/JPY in critical support zone

Trendline resistance from the May/June highs again did its job on this pair last week. We warned that the close was important for direction with bulls trying to push above resistance around 152. With the weak weekly close, this pair is now down six straight days.

Prices hit support around the August and April lows in a zone just above 149. The move above 150 earlier today has been rebuffed and the pair is now heading for the pivot July spike low at 148.45. The well-watched 200-day SMA sits at 149.62. There is also a long-term trendline from the pandemic crisis lows here. The daily RSI is touching 25 so oversold. But if bears can consolidate down here, then targets to the downside come in at 147.95 and below.