GBP/USD Rebound Could Face Hurdles12 February, 2019 by Aayush Jindal in Market Analysis
- The British Pound declined heavily and broke the 1.3040 support area against the US Dollar.
- Two bearish trend lines formed with resistance at 1.2970 and 1.3025 on the 4-hours chart of GBP/USD.
- The UK Manufacturing Production in Dec 2018 declined 0.7% (MoM), compared with the +0.1% forecast.
- Today in the US, the NFIB Business Optimism Index for Jan 2019 will be released, which could decline from 104.4 to 103.2.
GBPUSD Technical Analysis
After a solid upward move, the British Pound faced sellers near 1.3200 area against the US Dollar. The GBP/USD pair started a major decline and broke the 1.3100 and 1.3040 supports to move into a bearish zone.
Looking at the 4-hours chart, the pair settled below the 1.3000 support and the 100 (red) simple moving average (4-hours), opening the doors for more losses in the near term. The pair tested the 1.2850 support area, where buyers emerged.
Later, there was an upside correction above the 1.2925 level and the 23.6% Fib retracement level of the recent decline from the 1.3160 high to 1.2854 low.
However, the pair faced a strong resistance near the 1.3000 level and the 38.2% Fib retracement level of the recent decline from the 1.3160 high to 1.2854 low. Moreover, there are two bearish trend lines formed with resistance at 1.2970 and 1.3025 on the same chart.
A successful close above the 1.3000 and 1.3025 resistance is needed for the pair to move back in the positive zone. If not, there is a risk of a downside move towards the 1.2850 and 1.2800 supports.
Fundamentally, the UK Manufacturing Production report for Dec 2018 was released recently by the National Statistics. The market was looking for a minor rise in the production by 0.1% in Dec 2018, compared with the previous month.
However, the result was disappointing as there was a 0.7% decline the UK Manufacturing Production. Looking at the Industrial Production, there was a 0.5% decline, which was more than the last -0.3%.
Overall, the price action is still bearish, suggesting more losses in GBP/USD. If there is an upside correction, the pair may perhaps struggle near the 1.3000 handle in the near term.
Economic Releases to Watch Today
- BOE’s Governor Mark Carney Speech.
- US NFIB Business Optimism Index Jan 2019 – Forecast 103.2, versus 104.4 previous.