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GBP/USD In Significant Downtrend Below 1.3000

Aayush Jindal

Aayush Jindal

Key Highlights

  • The British Pound traded to a new monthly low at1.2865 against the US Dollar.
  • A major bearish trend line is forming withresistance near 1.2980 on the 4-hours chart of GBP/USD.
  • The US Personal Income in March 2019 (MoM)increased 0.1%, less than the 0.4% forecast.
  • The US Pending Home Sales could rise 0.5% inMarch 2019 (MoM).

GBPUSD Technical Analysis

Earlier this month, the British Pound traded below the key 1.3000 support against the US Dollar. The GBP/USD pair even broke the 1.2920 support and traded to a new monthly low at 1.2865.

Looking at the 4-hours chart, the pair clearly moved into abearish zone with a close below the 1.3000 level and the 100 simple movingaverage (4-hours). After trading as low as 1.2865, the pair corrected above the1.2900 and 1.2920 levels.

The pair even climbed above the 38.2% Fib retracement levelof the last decline from the 1.3019 high to 1.2865 low. However, the recoverywas capped by the 1.2945-1.2950 resistance zone.

Besides, it seems like the pair failed near the 50% Fibretracement level of the last decline from the 1.3019 high to 1.2865 low. Tothe topside, there is a strong resistance formed near the 1.2980, 1.3000 and1.3020 levels.

There is also a major bearish trend line forming withresistance near 1.2980 on the same chart. Therefore, to start a solid recovery,GBP/USD must clear the 1.2980, 1.3000 and 1.3020 resistance levels. If not,there is a risk of additional losses below the 1.2865 swing low.

Fundamentally, the US Personal Income report for March 2019 wasreleased by the Bureau of Economic Analysis, Department of Commerce. The marketwas looking for a rise of 0.4% in the Personal Income, compared with theprevious month.

The actual result lower than the forecast, as the USPersonal Income increased only 0.1%, less than the last 0.2%. Looking at disposablepersonal income (DPI), there was an increase of $0.6 billion (less than 0.1%), andpersonal consumption expenditures (PCE) was up $123.5 billion (0.9%).

Overall, GBP/USD is clearly facing many resistances near1.3000 and it may continue to struggle in the near term.

Economic Releases to Watch Today

  • German CPI April 2019 (YoY) (Preliminary) –Forecast +1.6%, versus +1.3% previous.
  • German CPI April 2019 (MoM) (Preliminary) –Forecast +0.5%, versus +0.4% previous.
  • Germany’s Unemployment Change April 2019 -Forecast -6K, versus -7K previous.
  • Germany’s Unemployment Rate April 2019 –Forecast 4.9%, versus 4.9% previous.
  • Euro Zone GDP Q1 2019 (Preliminary) (QoQ) -Forecast 0.3%, versus 0.2% previous.
  • US Pending Home Sales March 2019 (MoM) -Forecast +0.5%, versus -1.0% previous.
  • Chicago Purchasing Manager’s Index April 2019 –Forecast 59.0, versus 58.7 previous.