Cable ignores S&P’s warning, extends gains

GBP/USD is extending gains, now trading above 1.4260 as traders paid little attention to ratings agency S&P’s warning about a potential rating downgrade in case of Brexit.

Trades above 50% Fibo

The pair now trades above 1.4252 (50% of 1.4669-1.3835) levels. Pound fell below 1.42 levels for a brief moment earlier today after the construction PMI figure printed in line with the estimates.

However, the bid tone not only recovered but strengthened further despite S&P’s warning that Britain could lose its AAA rating. Similar warnings have hit the wires off late and hence did not receive much attention from the market.

The focus now shifts to the US data releases – ISM New York Index, Labor market conditions, and factory orders.

GBP/USD Technical Levels

The immediate hurdle is noted at 1.4278 (50-DMA). Acceptance above the same may put intraday sell side arguments to rest and open doors for 1.4330 (23.6% of 1.5930-1.3835) – 1.4350 (61.8% of 1.4669-1.3835).

Conversely, a breakdown of support at 1.42 would expose 1.4171 (Friday’s low) - 1.4145 (rising trend line support). A break below 1.4145 would reinforce bears and open doors for 1.4079 (Jan 21 low).