GBP/USD Rebound Could Face Strong Resistance02 April, 2019 by Aayush Jindal in Market Analysis
- The British Pound found support near 1.2980 and recently recovered against the US Dollar.
- A major bearish trend line is in place with resistance at 1.3190 on the 4-hours chart of GBP/USD.
- The UK Manufacturing PMI in March 2019 increased from 52.1 to 55.1.
- The UK Construction PMI for March 2019 is likely to rise from 49.5 to 49.8.
GBPUSD Technical Analysis
This past week, there was a sharp decline in the British Pound from the 1.3270 swing high against the US Dollar. The GBP/USD pair traded below the 1.3120 support level and tested the key 1.2980 support area.
Looking at the 4-hours chart, the pair traded as low as 1.2977 and later rebounded above the 1.3050 resistance. Buyers even pushed the price above the 1.3100 level and cable tested the 50% Fib retracement level of the last decline from the 1.3269 high to 1.2977 low.
To the topside, there are many resistances for buyers, starting with the 200 simple moving average (4-hours, green) and 1.3125. The next key resistance is near 1.3160 and the 100 simple moving average (4-hours, red). Besides, the 61.8% Fib retracement level of the last decline from the 1.3269 high to 1.2977 low is also near the 1.3160 level.
There is also a major bearish trend line in place with resistance at 1.3190 on the same chart. Therefore, if the pair continues to rise, it is likely to face a strong resistance near 1.3160, 1.3190 and 1.3200.
A successful close above 1.3200 might push the pair back in a bullish zone. Conversely, a failure to clear the 1.3160 or 1.3190 resistance could trigger a fresh decline below 1.3050.
Fundamentally, the UK Manufacturing PMI for March 2019 was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was looking for a decline from the last reading of 52.0 to 51.0.
The actual result was better than the forecast, as there was a sharp increase in the UK Manufacturing PMI to 55.1. Besides, the last reading was revised up from 52.0 to 52.1.
The report added:
Companies stepped up production to build-up inventories in advance of Brexit and also meet rising inflows of new work (mainly reflecting stockpiling at clients). New business improved from both domestic and export markets. This had a positive impact on staff hiring, with jobs growth recorded following back-to-back reductions at the start of the year.
GBP/USD was boosted after the release, but it won’t be easy for buyers to gain bullish momentum above the 1.3160 level.
Economic Releases to Watch Today
- UK’s Construction PMI for March 2019 – Forecast 49.8, versus 49.5 previous.
- US Durable Goods Orders for Feb 2019 – Forecast -1.8% versus +0.3% previous.