Last week, the pound was the second worst performing currency after the yen. This under-performance can be partly explained by the less volatility of the pound and have turned more risk averse reflecting heightened concerns over downside risk to growth of China globally. Recent economic data has shown a loss of growth momentum in the summer. And due to supply problems growth could slow further in the winter.
On the first of the new trading week, this pair attracted some dip-buying and rallied over 50 pips from its daily low, around 13660-55 region. The momentum pushes the pair above the 1.3700 mark. Because of the release of better-than-expected US Durable Goods Orders for August, the USD maintained its bid tone near one month tops. If this pair continues to be trading above 1.3700, it is likely to accelerate the uptrend move to reclaim the 1.3800 level. A break above 1.3800 will make this pair move toward its resistance at the 1.3835-40 region ahead of the 1.3870-75 supply zone.
On the flip side, a break below 13.660 region, will make this pair more vulnerable, and slide back towards the challenging mark 1.3600.
