GBP/USD: On its way to test March high at 1.3381 – CitiBank

Analysts at Citibank argue that political factors continue to be a key driver in the GBP/USD pair. The see more gains from a technical perspective in the short-term.

Key Quotes:

“GBP outlook. Political drivers remain. There is probably modest GBP upside remaining in the short/medium term but underlying data momentum remains poor in the UK, and the removal of political risk in early 2020 will bring back fundamentals such as macro data and the MPC.”

“Current odds suggest the most likely election outcomes as ultimately GBP positive - either a Conservative majority, the market base case, or a Labor-led coalition. We think that a Tory majority would lead to a bounce in market sentiment and possible fiscal ease from the newly formed government which support the UK economy. We are targeting 1.38 in GBP/USD spot.”

“GBPUSD breached good resistance between 1.3103 (200 week moving average) and 1.3156 (Downward sloping trend line from 2014 high). We do expect it will be broken together and open up the way for a test of the March 2019 high at 1.3381.”