This week we saw some USD-consolidation and GBP-resilience. However, as we get into the 1/15 session, we are seeing the market resist a GBP/USD rally.
The GBP/USD was in a bullish correction since last week, but failed to break above 1.5250 this week. Then, the SNB came with a shocker. 1) It cut LIBOR rates to the -0.25% to -0.75% range. 2) More importantly, it announced giving up trying to support the EUR/CHF above the 1.20 floor, which it has been doing since 2011. This caused a chain of reaction which was eventually a drag on the USD. However, that was mainly in commodities currencies, and not against the euro, or pound. The GBP/USD failed to push above 1.5250, and looks ready for bearish continuation.
It should at least break below 1.5150 to reintroduce the bearish outlook. However, if it can hold above 1.5150 and climb above 1.52, there is further upside risk in the short-term to 1.53. If price does hold below 1.5150, it opens up the 1.5050 low with risk of falling towards the 1.50 handle next week.
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