GBPUSD: With a sharp sell-off reversing GBP’s two-day recovery and breaking its minor support at 1.5376 level, the risk of further weakness is now expected towards its key support located at the 1.5270 level, its Oct 2011 low. This level remains a barrier that must be overcome in order for GBP to resume its medium term downtrend towards its .618 Fib Ret at 1.5187 (1.4229-1.6736 rally) and possibly lower towards its big psycho level at 1.5000. Its daily RSI is bearish and pointing lower suggesting further weakness. Alternatively, on any recovery higher, the pair will have to return above the 1.5497 level, its Jan 10’2012 high to reverse its present declines. This will bring further strength towards the 1.5770/79 levels where a violation will send the pair further higher towards the 1.5885 level, its Nov 18’2011 high and then the 1.6161 level, its Oct 31’2011 high. On the whole, GBP’s downside vulnerability remains intact as it looks to resume its medium term weakness.
