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Forex: GBP/USD pares gains to return to 1.5162/64

The GBP/USD has moved unevenly Tuesday, however the pound has failed to recapture the allure of its safe-haven status and this is reflective in the sporadic fluctuations and declines seen recently. Recent movement in the 1.5221 region (daily maximum) was short-lived, as the pair has now pared its gains and fallen back towards opening levels at 1.5162/64 during European trading.

“Advances are for now capped by the 1.5220 region (Fib 61.8% of 1.5315/1.5069 fall / 20-day EMA and more important, the base of previous multi-year range, with break above 1.5230/70 zone, required to signal stronger recovery. More worryingly, an overall bearish tone, however, keeps psychological 1.5000 target in near-term focus.” warns Slobodan Drvenica, an analyst at Windsor Brokers Ltd.

Later today at 10:00 GMT in the United Kingdom, investors will be keyed in to the Inflation Report hearing, followed by MPC Member Bean’s Speech. Capping off events in the UK will ultimately be the CBI Distributive Trades Survey – Realized (MoM) in the month of February at 11:00 GMT.

The downgrade of the UK last week has already triggered a response in GBP. On Monday the currency underperformed nearly all G10 currencies – even against the EUR and JPY, both of which had some unfavorable event risk to reckon with. According to Research Analyst Gareth Berry at UBS, “Bearish trend conditions persist for the GBP/USD and any upside must be limited. Based on current levels, the cross will meet support is at 1.5073 ahead of 1.4949.”

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