GBP/USD continued falling, yet in a choppy manner amid mixed top-tier figures and a problematic advance on Brexit. The BOE also added to the mess. The upcoming week’s highlight is the final GDP report. Here are the key events and an updated technical analysis for GBP/USD.
EU leaders formally approved moving to the next phase of Brexit talks, but trade relations could remain complicated. In addition, May’s government suffered a defeat in parliament and the vulnerability was exposed. Data was mixed: inflation did not fall but actually breached the 3% y/y level. Retail sales jumped by 1.1% amid rising wages, but jobless claims rose than expected. All in all, the economy is looking mixed and a lot depends on what Brexit negotiations yield.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
BP/USD Technical Analysis
Pound/dollar tried moving higher but could not breach the 1.35 level (mentioned last week). It eventually dropped to lower ground.
Technical lines from top to bottom:
The recent cycle high of 1.3620 serves as strong resistance. 1.3550 was the November peak.
1.3450 capped the pair in mid-December and serves as resistance. The round level of 1.33 is a key level of support, working as such around the same period of time.
1.3225 was the high point of September. It is followed by 1.3180, which capped the pair in July.
1.3080 worked as support in mid-October and also was weak support during November. 1.3030 is the bottom of the range, cushioning cable in October and also in early November.
I remain bearish on GBP/USD
With Brexit talks not leading to a positive outcome on trade, worrying signs of rising unemployment and a dovish central bank, it is hard to see reasons for the pound to rise.
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