Royal Bank of Scotland - "GBP/USD: Some disappointing follow through from the break-out of the channel last week, but the sentiment remains that GBP should step up to be the outperformer from the USD, EUR and GBP group. Still the longer-term picture is for GBP/USD to remain below the 1.6306 level into Q1 of next year and still looking for the downside targets of either 1.56 or 1.53 before the bounce occurs. This channel break only looks like a short-term squeeze to 1.6176 even 1.6270 before the sell-off returns.
Should I be wrong and the market manages to rally through the 1.6303 level, then the trend line from the previous annual highs around 1.6660 becomes the target and subsequent potential resistance level.
EUR/GBP: Finally some technical price action plays out in the charts; the 0.8156/63 level holds steady before the sell-off begins, the market then closes on its low and forms a bearish engulfing candle. Targets swiftly become 0.7959 onto 0.7757.
The two previous highs that sat at the 0.8156/63 level looked in danger of being broken as the last 3 weeks had all been positive EUR in terms of open/close ranges, but last week unwound a lot of positive EUR price action and formed a reversal pattern at the same time. The downside levels are the lows around 0.7959/62 (this is a 50% retracement from the summer sell-off) onto the annual low at 0.7757, where the market got down to on the week commencing the 23rd of July. Should I be wrong and the market rally through the 0.8162 level, then be aware that 0.8223 is resistance too."