GBP/USD Facing Uphill Task Near 1.290030 October, 2018 by Aayush Jindal in Market Analysis
- The British Pound declined sharply and traded below 1.2800 recently against the US Dollar.
- There is a crucial bearish trend line in place with resistance at 1.2880 on the 4-hours chart of GBP/USD.
- UK’s Mortgage Approvals in Sep 2018 were 65.269K, more than the 65.000K forecast.
- Today, the Euro Zone Gross Domestic Product for Q3 2018 (Preliminary) will be released, which is forecasted to grow 0.4% (QoQ).
GBPUSD Technical Analysis
The British Pound started a major downside move from the 1.3240 resistance against the US Dollar. The GBP/USD pair declined heavily and broke the 1.3000, 1.2950 and 1.2920 support levels.
Looking at the 4-hours chart, the pair was under a lot of bearish pressure below the 1.3000 support. It followed a bearish structure and declined below the 1.2800 level. A new monthly low was formed at 1.2779.
The pair is currently consolidating losses above the recent low and it is facing a lot of hurdles on the upside near 1.2880 and 1.2900. There is also a crucial bearish trend line in place with resistance at 1.2880 on the same chart.
Moreover, the 50% Fib retracement level of the recent decline from the 1.3044 high to 1.2779 low is around 1.2900 to act as a solid resistance. Therefore, it won’t be easy for buyers to push GBP/USD above the 1.2880 and 1.2900 resistance levels in the near term.
On the downside, if there is a break below the 1.2770-1.2775 area, the pair is likely to decline towards the 1.2720 support area.
Fundamentally, the UK Mortgage Approvals report for Sep 2018 was released by the Bank of England. The market was looking for a decline from the last reading of 66.440K to 65.000K.
However, the result was better than the forecast as the actual figure was 65.269K and the last reading was revised from 66.440K to 66.101K. The report added that:
Consumer credit increased by £0.8bn in September. This was less than in August, as new borrowing for car finance fell sharply. The flow of mortgage lending increased to £3.9 billion in September, following two relatively weak months.
Overall, the US Dollar remains in control and it seems like recoveries in EUR/USD and GBP/USD are likely to a lot of challenges this week.
Economic Releases to Watch Today
- Euro Zone Gross Domestic Product Q3 2018 (Preliminary) (QoQ) – Forecast 0.4%, versus 0.4% previous.
- Germany’s Unemployment Change for Oct 2018 – Forecast -12K, versus 23K previous.
- Germany’s Unemployment Rate for Oct 2018 – Forecast 5.1%, versus 5.1% previous.
- German Consumer Price Index for Oct 2018 (YoY) (Preliminary) – Forecast +2.4%, versus +2.3% previous.
- German Consumer Price Index for Oct 2018 (MoM) (Preliminary) – Forecast +0.1%, versus +0.4% previous.