Bank of America Merrill Lynch remains of the view that the USD 6m bull trend is quickly drawing to a close and that a medium-term correction lower is set to unfold.
Specifically, BofA now thinks that if the pair manages to stay above 1.2510, this would indicate that the base is in and that the the trend has turned.
“Indeed, in the weeks ahead, we look for a period of choppy range-trading between the 1.30/1.23 area before the long-term bear trend resumes for 1.1706 and, potentially, below,” BofA argues.
In contrast, BofA thinks that GBP/USD looks to have greater downside potential than previously thought.
Indeed, BofA argues that a break of 1.5605/1.5578 area support would clear the way for a the summer 2013 pivot at 1.5422/1.5436
“Bulls need a break back above 1.5791 to indicate basing and a bullish turn in trend,” BofA adds.