GBP USD Rebounds after 18 Month Low

GBP/USD (daily chart shown below) has rebounded after having hit a new 18-month low below 1.5000 late last week. The currency pair dropped to 1.4950 on Friday, a level not seen since July of 2013.

Prior to last week’s low, GBP/USD had continued to trade within a sharp bearish trend from the 1.7190 high in mid-July of last year. The pair kicked off 2015 with a dramatic plunge that broke down swiftly below the 1.5400 and then 1.5250 support levels.

The 1.5000 psychological support level had been the next major downside target, which was quickly hit on last week’s drop.

This week’s rebound has pushed the currency pair up towards key resistance around the 1.5250 prior support level. If the rebound is able to push above this resistance, the next higher resistance resides around 1.5400.

Despite the current rebound, however, downside pressure should continue to prevail. A continuation of the entrenched downtrend on a turn back down below 1.5000 should begin to target lower support levels around 1.4800 and then 1.4500.

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