GBP/USD finally basing ?

GBP/USD is better bid on the 1.22 handle with a high of 1.2234 and a full cent up on the day while continuing in a recovery from 1.2132.

GBP/USD has been under immense pressure and is extremely fragile in the current environment with all the uncertainty around Brexit. Analysts are looking for a bottom in the pound currently after last week's flash crash that sent the pound to depths of the 1.13 handle and in some cases, lows of the 1.11 handle had been reported. However, a base has been forming back in the low 1.20's again.

Analysts at Bank of Tokyo Mitsubishi, however, said that they have not lowered their upwardly revised year-end forecast of 1.2870 as published in the latest Foreign Exchange Outlook on 1st October. "For sure, it may now prove to have been premature to revise our year-end forecast from 1.2370 published in August. But, we are not yet giving up on a rebound in GBP/USD," the analysts explained, adding, "We are currently experiencing a period of pronounced volatility and the price action and squeeze higher for the pound since yesterday points to a market that has become excessively pessimistic and positioned one way and any turn in sentiment could see an equally sharp move back higher."

GBP/USD levels

Analysts at Commerzbank explained that we have a resistance line at 1.2939 and they will consider that the market remains directly offered below the 1.3056 late September high. "Below 1.1938 we would target the 1.0463 1985 low."

With spot trading at 1.2246, we can see next resistance ahead at 1.2261 (Daily High), 1.2289 (Hourly 100 SMA), 1.2321 (Daily Classic R1), 1.2327 (Yesterday's High) and 1.2435 (Daily Classic R2).

Support below can be found at 1.2213 (Daily Classic PP), 1.2207 (Daily Open), 1.2196 (Hourly 20 EMA), 1.2133 (Daily Low) and 1.2122 (Monthly Low).