GBP/USD Recovery Approaching Key Juncture16 July, 2019 by Aayush Jindal in Market Analysis
- The British Pound recovered recently after trading as low as 1.2439 against the US Dollar.
- GBP/USD is now struggling below the 1.2580 resistance and a bearish trend line on the 4-hours.
- The NY Empire State Manufacturing Index increased from -8.6 to 4.3 in July 2019.
- The UK Claimant count in June 2019 could change by 18.9K, less than the last 23.2K.
GBPUSD Technical Analysis
After a strong decline, the British Pound found support near 1.2440 against the US Dollar. The GBP/USD pair started a short term correction above 1.2500, but it is facing a lot of hurdles on the upside.
Looking at the 4-hours chart, the pair traded as low as 1.1438 and recently corrected above the 1.2500 and 1.2520 resistance levels. Besides, there was a break above a connecting bearish trend line at 1.2505.
The pair extended its recovery above 1.2540 plus the 23.6% Fib retracement level of the downward move from the 1.2783 high to 1.2439 low. However, the pair struggled to clear the 1.2575-1.2580 resistance area.
Moreover, there is a strong resistance forming near the 1.2580-1.2600 area plus a bearish trend line on the same chart. Besides, the 100 simple moving average (red, 4-hours) is positioned near the 50% Fib retracement level of the downward move from the 1.2783 high to 1.2439 low.
Therefore, the 1.2580 and 1.2600 levels are likely to act as significant resistances if the pair continues to rise. A successful close above 1.2600 and the 100 SMA might start a strong upward move in GBP/USD towards the 1.2650 and 1.2700 levels.
Conversely, if there is no upside break above the 1.2600 resistance, the pair could resume its decline. An immediate support is at 1.2500, below which there is a risk of more losses towards 1.2440.
Fundamentally, the NY Empire State Manufacturing Index for July 2019 was released by the Federal Reserve Bank of New York. The market was looking for a rise from -8.6 to 2.0.
The actual result was better than the market forecast, as the NY Empire State Manufacturing Index climbed higher sharply to 4.3 in July 2019.
The report added:
New orders were little changed, and shipments in-creased. Unfilled orders and inventories continued to move lower, while delivery times were longer. The employment index remained negative, falling to its lowest level in nearly three years.
Overall, GBP/USD could struggle to break the 1.2600 resistance area. Similarly, EUR/USD is facing a strong resistance near the 1.1300 area.
Economic Releases to Watch Today
- UK Claimant Count Change June 2019 – Forecast 18.9K, versus 23.2K previous.
- UK ILO Unemployment Rate May 2019 (3M) – Forecast 3.8%, versus 3.8% previous.
- German ZEW Economic Sentiment Index for July 2019 – Forecast -20.0, versus -21.1 previous.
- US Retail Sales June 2019 (MoM) – Forecast +0.2%, versus +0.5% previous.