Key Highlights
- The British Pound rallied recently after trading as low as 1.2960 against the US Dollar.
- A crucial bearish trend line was breached with resistance at 1.3120 on the 4-hours chart of GBP/USD.
- The US Retail Sales in Jan 2019 increased 0.2% (MoM), compared with the last decline of 1.6%.
- The US Consumer Price Index for Feb 2019 will be released today, which could increase 0.2% (MoM).
GBPUSD Technical Analysis
The started a major decline from the 1.3350 high against the US Dollar. The GBP/USD pair broke the 1.3200 and 1.3120 support levels to enter a bearish zone before buyers appeared near 1.2960.
Looking at the 4-hours chart, the pair gained bearish momentum after it broke the 1.3125-1.3120 support and the 100 simple moving average (red, 4-hours). It even tumbled below the 1.3020 and 1.3000 support levels.
A new weekly low was formed at 1.2961 and later the pair started a solid upward move. It broke the 1.3055 resistance and the 50% Fib retracement level of the last decline from the 1.3350 high to 1.2961 low.
More importantly, there was a break above a strong resistance near the 1.3125 level and a crucial bearish trend line with resistance at 1.3120 on the same chart. Above the trend line, the pair spiked above the next resistance at 1.3200 and the 61.8% Fib retracement level of the last decline from the 1.3350 high to 1.2961 low.
A successful close above the 1.3155 resistance means that pair likely moved into the positive zone. If there is a downside correction, the broken resistances at 1.3155 and 1.3125 may act as supports.
Fundamentally, the US Retail Sales figure for Jan 2019 was released recently by the US Census Bureau. The market was looking for no change in sales in Jan 2019, compared with the previous month.
The result was positive as there was a 0.2% rise in sales in Jan 2019, better than the last decline of 1.6% (revised from -1.2%). Looking at the Retail Sales ex Autos, there was an increase of 0.9%, whereas the market was looking for +0.3%.
The report added that:
Total sales for the November 2018 through January 2019 period were up 2.6 percent (±0.5 percent) from the same period a year ago. The November 2018 to December 2018 percent change was revised from down 1.2 percent (±0.5 percent) to down 1.6 percent (±0.3 percent).
Overall, GBP/USD could dip in the short term, but the 1.3125 and 1.3155 supports are likely to prevent downsides.
Economic Releases to Watch Today
- UK Industrial Production for Jan 2019 (MoM) – Forecast 0%, versus -0.5% previous.
- UK Manufacturing Production for Jan 2019 (MoM) – Forecast 0%, versus -0.7% previous.
- UK Trade Balance non-EU for Jan 2019- Forecast £-3.750B, versus £-3.642B previous.
- US Consumer Price Index Feb 2019 (MoM) – Forecast +0.2%, versus 0% previous.
- US Consumer Price Index Feb 2019 (YoY) – Forecast +1.6%, versus +1.6% previous.
- US Consumer Price Index Ex Food & Energy Feb 2019 (YoY) – Forecast +2.2%, versus +2.2% previous.
