GBP/USD: Here is Why Upsides Are Limited31 July, 2018 by Aayush Jindal in Market Analysis
- The British Pound faced a strong resistance near 1.3200 against the US Dollar.
- There is a significant bearish trend line in place with resistance at 1.3185 on the daily chart of GBP/USD.
- UK’s Mortgage Approvals in June 2018 were 65.619K, more than the forecast of 65.500K.
- Today, the Euro Zone Gross Domestic Product figure for Q2 2018 (Preliminary) will be released, which is forecasted to grow 0.4% (QoQ).
GBPUSD Technical Analysis
The British Pound attempted a recovery above 1.3180 against the US Dollar. However, the GBP/USD pair faced a strong resistance near 1.3190-1.3200, which prevented further gains.
Looking at the daily chart, the pair formed a low near 1.2960 and bounced back. However, the upside move faced a tough challenge near a significant bearish trend line with current resistance at 1.3185.
Moreover, the pair failed to break the 61.8% Fibonacci retracement level of the last drop from the 1.3362 high to 1.3258 low. The pair declined back below 1.3150 and is currently consolidating losses.
It seems like the trend line resistance is a crucial barrier for more upsides above 1.3200 in GBP/USD. Should there be a daily close above 1.3200 and the trend line, the pair may move into a bullish zone. The next resistances are at 1.3300 and 1.3360.
On the downside, an initial support awaits near 1.3055, below which, the pair could revisit the last swing low of 1.2960.
Recently in the UK, the Mortgage Approvals reading for June 2018 was released by the Bank of England. The market was looking for 65.500K compared with the last reading of 64.526K.
The actual result was positive as the Mortgage Approvals were 65.619K, and the last reading was revised to 64.684K. The report added that:
The annual growth rates of consumer credit and mortgage lending were unchanged in June, at 8.8% and 3.2% respectively. The amount of money held by UK households increased by £3.7 billion in June, slightly above its recent average.
The GBP/USD may perhaps move higher, but a daily close above 1.3200 and bearish trend line is must for further upsides in the near term.
Economic Releases to Watch Today
- Euro Zone Gross Domestic Product Q2 2018 (Preliminary) (QoQ) – Forecast 0.4%, versus 0.4% previous.
- German Retail Sales for June 2018 (MoM) – Forecast +1.0%, versus -2.1% previous.
- German Retail Sales for June 2018 (YoY) – Forecast +1.5%, versus -1.6% previous.
- Germany’s Unemployment Change for July 2018 – Forecast -10K, versus -15K previous.
- Germany’s Unemployment Rate for July 2018 – Forecast 5.2%, versus 5.2% previous.
- US Personal Income for June 2018 (MoM) – Forecast +0.4%, versus +0.2% previous.
- US Core Personal Consumption Expenditure for June 2018 (MoM) – Forecast +0.1%, versus +0.2% previous.