GBP/USD Could Test 1.2750 Before Fresh Increase29 October, 2019 by Aayush Jindal in Market Analysis
- The British Pound is correcting gains and recently traded below 1.2850 against the US Dollar.
- A breakout pattern is forming with support near 1.2820 on the 4-hours chart of GBP/USD.
- EUR/USD is trading above the key 1.1050 support area.
- The US Pending Home Sales could increase 0.9% in Sep 2019 (MoM), less than the last 1.6%.
GBP/USD Technical Analysis
After a strong upward move, the British Pound struggled near 1.3000 against the US Dollar. GBP/USD started a downside correction and traded below the 1.2950 and 1.2920 support levels.
Looking at the 4-hours chart, the pair declined below the 23.6% Fib retracement level of the upward move from the 1.2515 low to 1.3014 high. The pair even declined below the 1.2880 and 1.2850 support levels.
However, it is trading well above the 50% Fib retracement level of the upward move from the 1.2515 low to 1.3014 high. Moreover, there is a breakout pattern forming with support near 1.2820 on the same chart.
If there is a downside break below 1.2820, the pair could correct further towards the 1.2760 and 1.2750 support levels. Conversely, if there is an upside break, the pair could rise steadily towards the 1.2900 and 1.2950 resistance levels.
Fundamentally, the Chicago Fed National Activity Index (CFNAI) for Sep 2019 was released by Federal Reserve Bank of Chicago. The market was looking for a drop from the last reading of 0.10 to -0.37.
However, the actual result was disappointing, as there was a sharp decline from the revised reading of 0.15 to -0.45.
The report added:
The 85 economic indicators that are included in the CFNAI are drawn from four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories.
Overall, GBP/USD remains well supported on dips near the 1.2800 and 1.2750 levels. Similarly, EUR/USD is likely to find a strong support near the 1.1050 area.
Upcoming Economic Releases
- US Pending Home Sales for Sep 2019 (MoM) – Forecast +0.9%, versus +1.6% previous.
- US Consumer Confidence Oct 2019 – Forecast 128.0, versus 125.1 previous.