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Forex pairs in this Article » GBP/USD
FXstreet.com (Athens) – The GBP/USD is moving heavily downwards the last couple of hours mostly due to the closing of the short positions on the American dollar after the largest daily drop of DXY in 3 weeks yesterday.

GBP/USD is losing uptrend momentum as market participants take their profits on greenback

The GBP/USD kicked off the trading session in early Asian trading hours with a spike above 1.6100, mostly due to the fact that UK RICS house balance data climbed to an 11-year high figure, while the UK firms’ sales and optimism seem to soar in the UK pertaining the third quarter of 2013. Despite the fact that UK might be the first country of Europe to hike rates, the cable found itself under heavy pressure in middle European trading session. Traders could consider that this downside pressure might be well attributed to the profit taking on the American dollar positions after the largest drop of DXY in 3 weeks yesterday. Nevertheless, markets are being very complacent about the risks, given that not only is the US government effectively shut-down, but the US is also around ten days from default given that there is no even an emerging approval on the raising of the US debt ceiling, i.e. tensions will not ease until a solution is found.

Technical outlook on the GBP/USD

Karen Jones, Head Technical Analyst at Commerzbank suggests that the “GBP/USD has held steady bouncing off the 20 day ma at 1.6039. Intraday rallies are indicated to terminate circa 1.6100/25. Our focus is the 1.5864 3 month uptrend. The market will need to close below here to confirm that it has topped short term and trigger losses to 1.5430, then 1.5104.” Our personal aspect of view indicates that the cable will be under great pressure as after a series of daily closes below the 10 days ema (1.6084), has weakened significantly the market. However, while the daily as of October 4 is at 1.6006 and the 21 daily MA at 1.6002, the key-support (even in psychological terms) 1.6000 area, should be broken in order for the pair to move further downwards.

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