GBP/USD: more upside to come yet? Target 1.3636 and 38.2% fibo

Sterling has started to stabilize after the lows against the dollar and euro that were recorded on July 6. 

Against the US dollar, it marked a low just below $1.28 while the euro had made a high just above 0.8625.  The pound is now consolidating higher as the initial shock factor and subsequent alarm sirens have been silenced by positive sentiment in the British economy of late. However, the new prime minister, May, has also put the breaks on and will not trigger article 50 until Scotland is on board. 

Sterling has been consolidating its losses since. In this consolidation, sterling firmed to $1.3480, and the euro pulled back toward GBP0.8250. This firmer sterling also came in light of the BoE holding at its first opportunity and now markets await the 4th August for their next meeting and the quarterly inflation report due at the same time. 

GBP/USD levels

"GBP/USD's correction higher last week fell short of the 1.3534/36 recent high and the 20 day m.a and looks set to consolidate very near term – it remains upside corrective going into this week," explained analysts at Commerzbank who added,  "We should allow for a rally to 1.3638, the 38.2% retracement and potentially 1.4158, the 61.8% retracement of the recent sell off. The market last week sold off towards and recovered just ahead of the 1.2750/78.6% retracement of the move from 1985 to 2007. Support at 1.2750 is regarded as the last defense for the 1.0463 1985 low."