JPMorgan Sees British Pound as Ripe for Rebound Amid Month-End Selling

The British Pound has been experiencing a sell-off, but according to JPMorgan's analysis, it may be ripe for a rebound. The bank's desk notes that hedge-fund selling has hurt the Pound-Dollar exchange rate (GBP/USD), with the currency closing at 1.3246 on Friday, up 0.27% on the day but still around 1.1% lower over the week.

JPMorgan sees support for GBP/USD at 1.3145-1.3160 and notes that the next level of resistance lies roughly 86-101 pips below this level. The desk also observes that pressure against the Euro is mounting, with EUR/GBP challenging the 0.8600/10 pivot.

The bank's analysis suggests that month-end selling could exacerbate Sterling's losses, but JPMorgan remains wary of chasing Pound lower. In fact, JPMorgan's desk describes some of Sterling's vulnerability as being linked to concerns over a potential US diesel export ban, which it sees as more damaging for the UK than continental Europe.

While JPMorgan doubts that an export ban will proceed, its willingness to fade the decline is still conditional. This means that if month-end flows do indeed stretch Sterling's losses further, JPMorgan may consider looking for a rebound after further selling.