GBP/USD Closing In Towards Next Key Break

Key Highlights

  • The British Pound remains in a bearish zone below 1.3200 against the US Dollar.
  • A crucial bearish trend line is formed with resistance at 1.3140 on the 4-hours chart of GBP/USD.
  • The US Factory Orders declined 0.5% in Feb 2019 (MoM), better than the -0.6% forecast.
  • The US NFIB Business Optimism Index in March 2019 might decline from 101.7 to 101.3.

GBPUSD Technical Analysis

The British Pound failed to break the 1.3200 resistance this past week and later declined against the US Dollar. The GBP/USD pair is trading above the 1.3000 support, but it is facing many hurdles near 1.3150.

GBPUSD Technical Analysis British Pound US Dollar

Looking at the 4-hours chart, the pair traded as high as 1.3191 and later declined sharply below the 1.3150 and 1.3100 support levels. The pair even broke the 1.3060 support and settled below the 100 simple moving average (4-hours, red) plus the 200 simple moving average (4-hours, green).

The pair revisited the 1.2990-1.3000 support area, where buyers emerged. Later, GBP/USD started consolidating losses and corrected above the 23.6% Fib retracement level of the last decline from the 1.3191 high to 1.2986 low.

To the upside, there are many resistances near the 1.3100 and 1.3150 levels. The first hurdle near 1.3100 is just above the 50% Fib retracement level of the last decline from the 1.3191 high to 1.2986 low.

There is also a crucial bearish trend line formed with resistance at 1.3140 on the same chart, coinciding with the 100 and 200 SMA’s. Therefore, a successful break above the 1.3150 resistance is needed to start a solid rebound.

On the other hand, if the pair fails to surpass the 1.3100 and 1.3150 resistances, there is a risk of a sustained drop below the 1.2990-1.3000 support area.

Fundamentally, the US Factory Orders report for Feb 2019 was released by the US Census Bureau. The market was looking for a 0.6% drop in orders, compared with the previous month.

The actual result was better than the forecast, as the US Factory Orders declined 0.5%. Moreover, the last reading was revised down from +0.1% to 0%. The overall result was negative since the new orders declined four of the last five months.

To sum up, GBP/USD is closing in towards the next key break either above the 1.3150 resistance area or below the 1.3000 support zone.

Economic Releases to Watch Today

  • UK BRC Like-For-Like Retail Sales March 2019 (YoY) – Forecast +0.1%, versus -0.1% previous.
  • US NFIB Business Optimism Index March 2019 – Forecast 101.3, versus 101.7 previous.
  • US IBD/TIPP Economic Optimism Index April 2019 (MoM) – Forecast 54.2, versus 55.7 previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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