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GBP/USD Starts Recovery, 1.4000 Still A Major Hurdle

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Aayush Jindal

Key Highlights

  • GBP/USD found support near 1.3800 and started a fresh increase.
  • It is likely to face many important hurdles near 1.3940 and 1.4000.
  • The UK Manufacturing PMI is likely to remain steady near 60.7 in April 2021.
  • The US ISM Manufacturing Index declined from 64.7 to 60.7 in April 2021.

GBP/USD Technical Analysis

This past week, the British Pound failed to stay above 1.3900 against the US Dollar. GBP/USD declined below 1.3850, but it remained well bid above the 1.3800 level.

Looking at the 4-hours chart, the pair topped near 1.3976 before starting a fresh decline. It broke a major contracting triangle with support near 1.3885. The pair even spiked below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

However, the 1.3800 zone acted as a strong support. A low was formed near 1.3799 and the pair recently started a fresh increase.

It broke the 1.3850 and 1.3860 resistance levels. The pair even cleared the 50% Fib retracement level of the downward move from the 1.3976 high to 1.3799 low.

On the upside, the pair could face resistance near 1.3920 and 1.3940. The main resistance is still near the 1.4000 zone, where the bears might take a stand. If there is a fresh decline, the bulls could possibly struggle to protect the 1.3800 support.

Fundamentally, the US ISM Manufacturing Index for April 2021 was released yesterday by the Institute for Supply Management (ISM). The market was looking for an increase from 64.7 to 65.0.

The actual result was lower than the forecast, as the US ISM Manufacturing Index declined from 64.7 to 60.7. Besides, the ISM Employment Index declined from 59.6 to 55.1.

Overall, GBP/USD could continue higher, but the bulls might face a strong selling interest near 1.4000. Besides, EUR/USD is still trading nicely above the 1.2000 support zone.

Economic Releases

  • UK Manufacturing PMI for April 2021 – Forecast 60.7, versus 60.7 previous.
  • US Factory Orders for March 2021 (MoM) - Forecast +1.3%, versus -0.8% previous.
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