#GBPUSD @ 1.13370 The pound hits resistance at 1.1400 after a 300-pip rally. (Pivot Orderbook analysis)

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• The pound hits resistance at 1.1400 after a 300-pip rally.
• News of a U-turn on the UK fiscal plan boost the cable.
• GBP/USD seen between 1.00 and 1.10 over the coming months – UBS.

The pair currently trades last at 1.13370.

The previous day high was 1.1134 while the previous day low was 1.0924. The daily 38.2% Fib levels comes at 1.1054, expected to provide support. Similarly, the daily 61.8% fib level is at 1.1004, expected to provide support.

The pound seems to be taking a breather as the impressive 300-pip rally from the 1.1060 area has found sellers at 1.1380 before pulling back to the lower range of 1.1300. The pound remains positive on daily charts after having appreciated beyond 3% over the last two days.

News reporting that the UK Government might be discussing increasing corporation tax next year, thus reversing the mini-Budget that roiled markets last month has been welcomed by investors.

Furthermore, the Financial Times reported on Wednesday that the Bank of England might have agreed privately with lenders on the possibility of extending bond purchases beyond Friday, the day announced as the deadline for the emergency plan. This has contributed to ease negative pressure on the cable.

In this backdrop, the market has overlooked the gloomy macroeconomic data released on Wednesday. National statistics data revealed that UK economy contracted at a 0.3% pace in September, against expectations of a flat performance, on the back of a 1.6% slump in Manufacturing production.

From a wider perspective, FX analysts at UBS see the pair capped below 1.10 over the next months: “With markets still concerned about the viability of the government’s fiscal plans, we think the pound will likely remain volatile, trading in a range of 1.00-1.10 against the US dollar over the coming months (…) Worries over the financial stability of the UK is also feeding into broader market risk aversion – which is also positive for the US dollar.”

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.1311 at the time of writing. Pair opened at 1.1102 and is trading with a change of 1.88 % .

The pair is trading above its 20 Daily moving average @ 1.1158, below its 50 Daily moving average @ 1.1549 , below its 100 Daily moving average @ 1.1875 and below its 200 Daily moving average @ 1.2501

The previous day high was 1.1134 while the previous day low was 1.0924. The daily 38.2% Fib levels comes at 1.1054, expected to provide support. Similarly, the daily 61.8% fib level is at 1.1004, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.0972, 1.0843, 1.0762
• Pivot resistance is noted at 1.1183, 1.1263, 1.1393

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