GBP/USD Could Dip Further Before Fresh Increase01 October, 2019 by Aayush Jindal in Market Analysis
- The British Pound declined below the key 1.2350 support against the US Dollar.
- GBP/USD could find support near 1.2230 or 1.2200.
- The UK GDP grew 1.3% in Q2 2019 (YoY), more than the 1.2% forecast.
- The UK Manufacturing PMI is likely weaken further from 47.4 to 47.0 in Sep 2019.
GBP/USD Technical Analysis
In the past few days, there was a steady decline in the British Pound after it broke 1.2400 against the US Dollar. GBP/USD even traded below the key 1.2350 support to enter a short term bearish zone.
Looking at the 4-hours chart, the pair broke a few of important supports near the 1.2400, 1.2380 and 1.2350 levels. Moreover, the pair traded below a major bullish trend line with support near 1.2400.
The recent decline was such that the pair settled below the 1.2350 level and the 100 simple moving average (red, 4-hours). However, the 50% Fib retracement level of the upward move from the 1.1958 low to 1.2582 acted as a support.
Besides, the 200 simple moving average (green, 4-hours) also provided support near 1.2270. If there are more downsides, the next key support is near the 1.2230 level (the previous resistance).
Any further downsides might push the pair towards the 1.2200 support or the 61.8% Fib retracement level of the upward move from the 1.1958 low.
On the upside, the previous supports near 1.2380 and 1.2400 are likely to stop gains. Therefore, a successful close above the 1.2400 level and the 100 SMA is must for a fresh increase in the coming sessions.
Fundamentally, the UK Gross Domestic Product report for Q2 2019 was released by the National Statistics. The market was looking for a 1.2% growth compared with the same quarter a year ago.
The actual result was better than the forecast, as the UK Gross Domestic Product grew 1.3%, up from the last 1.2%. However, the quarterly change was disappointing, as there was a 0.2% decline in the GDP.
The report added:
When compared with the same quarter a year ago, UK GDP increased by 1.3% to Quarter 2 2019; down from 2.1% to Quarter 1 (Jan to Mar) 2019.
Overall, the result was disappointing and it might spark another drop in GBP/USD in the near term. Similarly, EUR/USD could struggle to climb above the 1.0950 and 1.1000 resistance levels.
Upcoming Economic Releases
- Germany’s Manufacturing PMI for Sep 2019 – Forecast 41.4, versus 41.4 previous.
- Euro Zone Manufacturing PMI Sep 2019 – Forecast 45.6, versus 45.6 previous.
- UK Manufacturing PMI for Sep 2019 – Forecast 47.0, versus 47.4 previous.
- Euro Zone CPI for Sep 2019 (YoY) (Prelim) – Forecast +1.0%, versus +1.0% previous.
- Euro Zone Core CPI for Sep 2019 (YoY) (Prelim) – Forecast +1.0%, versus +0.9% previous.
- US Manufacturing PMI for Sep 2019 – Forecast 51.0, versus 51.0 previous.
- US ISM Manufacturing Index for Sep 2019 – Forecast 50.0, versus 49.1 previous.