Key Highlights
- The British Pound corrected lower and found support near 1.3060 against the US Dollar.
- During the correction, there was a break below a bullish trend line at 1.3170 on the 4-hours chart of GBP/USD.
- The Chicago Fed National Activity Index (CFNAI) in August remained at 0.18.
- Today, the US Housing Price Index for July 2018 will be released, which is forecasted to rise 0.2% (MoM).
GBPUSD Technical Analysis
After a decent upward move above the 1.3250 level, the British Pound faced resistance near 1.3290-95 against the US Dollar. The GBP/USD pair corrected lower and tested the 1.3060-80 support.
Looking at the 4-hours chart, the pair declined sharply from the 1.3298 swing high and traded below the 1.3200 support. Moreover, there was a break below a bullish trend line at 1.3170, opening the doors for more losses.
The pair traded as low as 1.3054 and later started a fresh upward move. It climbed above the 38.2% Fib retracement level of the last decline from the 1.3298 high to 1.3054 low.
However, there are many resistances on the upside near the 1.3170 and 1.3200 levels. Moreover, the 61.8% Fib retracement level of the last decline from the 1.3298 high to 1.3054 low is near 1.3205.
Therefore, it won’t be easy for buyers to clear the 1.3200 resistance zone. On the downside, the 1.3060-80 region is a crucial support. Below 1.3060, there is a risk of more losses towards 1.2980 and 1.2940.
Fundamentally, the Chicago Fed National Activity Index (CFNAI) for August was released yesterday. The market was looking for a decline from the last reading of 0.13 to 0.02.
However, the result was better than the forecast as there was no decline and the Chicago Fed National Activity Index remained at 0.18 from the previous revised reading of 0.18.
Overall, the GBP/USD pair could correct higher, but a break and close above the 1.3200 level is needed for a push towards the 1.3300 level in the near term.
Economic Releases to Watch Today
- S&P/Case-Shiller Home Price Indices for July 2018 (YoY) – Forecast +6.2%, versus +6.3% previous.
- US Housing Price Index for July 2018 (MoM) – Forecast +0.2%, versus +0.2% previous.
