GBP/USD has rallied strongly from price support at 1.3709. Nonetheless, economists at Credit Suisse expect the resistance from the 200-day moving average (DMA) at 1.3852 to cap the cable for another leg lower.

GBP/USD to see a top below the 200-DMA at 1.3852

“Despite the strength seen yesterday our bias remains to look for a fresh cap at the 200-DMA of 1.3830/55 and for the risk to turn back lower again.” 

“Support moves to 1.3775 initially then 1.3755, with a break below 1.3709/02 now needed to mark a near-term top for a fall to 1.3674/67. Beneath this latter area remains needed to suggest we are seeing a more concerted move lower, with support seen next at 1.3575/69, then 1.3544 and eventually the 1.3411 low.”

“A close above 1.3855 would reassert a broader sideways range, with resistance then seen next starting at the 1.3914 September high and stretching up to the 61.8% retracement of the fall from June at 1.3929, with a fresh cap expected here.”