GBP/USD Could Start Strong Rebound In Near Term11 June, 2019 by Aayush Jindal in Market Analysis
- The British Pound found support near 1.2560 and rebounded recently against the US Dollar.
- GBP/USD broke a major bearish trend line with resistance at 1.2675 on the 4-hours chart.
- The UK Industrial Production in April 2019 declined 2.7%, whereas the forecast was +0.1%.
- The UK Claimant Count in May 2019 could change 22.9K, less than the last 24.7K.
GBPUSD Technical Analysis
This past week, the British Pound found support near 1.2600 against the US Dollar. The GBP/USD pair started a strong rebound, broke the 1.2700 resistance, but failed to clear the 1.2760 resistance.
Looking at the 4-hours chart, the pair gained bullish momentum above the 1.2600 and 1.2650 levels. There was even a break above a major bearish trend line with resistance at 1.2675.
The pair even climbed above the 23.6% Fib retracement level of the last downward move from the 1.3047 swing high to 1.2558 swing low. However, the upward move was capped by the 1.2760 level.
The 38.2% Fib retracement level of the last downward move from the 1.3047 swing high to 1.2558 swing low also acted as a barrier. The current price action indicates that there are chances of an inverse head and shoulders pattern forming with support near 1.2650.
Therefore, as long as the pair is above 1.2650, there are chances of an upside break above 1.2750 and 1.2780 in the coming sessions.
On the downside, an initial support is at 1.2650, below which the pair is likely to start a fresh decline towards 1.2600 and 1.2550. The next important support is near the 1.2500 level.
Fundamentally, the UK Industrial Production report for April 2019 was released by the National Statistics. The market was looking for a 0.1% rise in the industrial production compared with the previous month.
However, the actual result was disappointing as there was a 2.7% decline in the industrial production. The Manufacturing Production also declined 3.9%, whereas the market was looking for a 0.2% rise.
The report stated that:
Production output fell by 2.7% between March 2019 and April 2019; the manufacturing sector provided the largest downward contribution, falling by 3.9%, its largest fall since June 2002 and the impact of Golden Jubilee shutdowns.
Overall, GBP/USD remains under pressure below 1.2750, but as long as it is above 1.2650, there are chances of more gains in the near term.
Economic Releases to Watch Today
- UK Claimant Count Change May 2019 – Forecast 22.9K, versus 24.7K previous.
- UK ILO Unemployment Rate May 2019 (3M) – Forecast 3.9%, versus 3.8% previous.
- US Producer Price Index May 2019 (MoM) – Forecast +0.2%, versus +0.2% previous.
- US Producer Price Index May 2019 (YoY) – Forecast +2.0%, versus +2.2% previous.