GBP/USD ticked up a bit in the first week of 2018, enjoying the weakness of the dollar. Manufacturing output and the trade balance stand out in the upcoming week. Here are the key events and an updated technical analysis for GBP/USD.
Both the manufacturing and construction PMIs missed expectations, showing a potential for a slowdown. However, the services sector, which is the largest one, showed stability according to the PMI. In the US, the greenback drifted lower despite better than expected data and a balanced FOMC meeting minutes report.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
BP/USD Technical Analysis
Pound/dollar made a move towards the 1.3615 level (mentioned last week) but didn’t manage to break that line. It then drifted back down to range.
Technical lines from top to bottom:
The recent cycle high of 1.3620 serves as strong resistance. 1.3550 was the November peak.
1.3460 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
Once again, the pound enjoyed the weakness of the dollar more than its own strength, but this was only enough to hold its ground. We could see some reckoning now.
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