Key Highlights
- The British Pound gained traction and broke the 1.2300 resistance area against the US Dollar.
- GBP/USD is facing resistance near 1.2400 and a trend line on the 4-hours chart.
- The UK Manufacturing Production in July 2019 increased 0.3% (MoM).
- The UK Claimant Count could change 29.3K in August 2019, less than the last 28.0K.
GBP/USD Technical Analysis
The British Pound started a strong rise above the 1.2200 key resistance against the US Dollar. The GBP/USD pair is showing positive signs and it could continue to rise above 1.2400.
Looking at the 4-hours chart, the pair formed a strong support above 1.2000 and climbed more than 200 pips this past week to settle above the 1.2200 level. Moreover, there was a close above the 1.2200 level and the 100 simple moving average (red, 4-hours).
The recent run was such that the pair broke the last swing high near 1.2309. It even traded close to the 1.2400 resistance level plus the 1.236 Fib extension level of the downward move from the 1.2309 high to 1.1958 low.
On the upside, there is a key resistance forming near the 1.2400 level and a trend line on the same chart. Therefore, the pair needs to climb above the 1.2400 resistance level to continue higher.
Conversely, if there is a downside correction, an initial support is near the 1.2310 level. The main support on the downside is near the 1.2250 level. Finally, the 100 SMA is near the 1.2200 level to provide a strong support.
Fundamentally, the UK Manufacturing Production for July 2019 was released by the National Statistics. The market was looking for a 0.1% decline in the production, compared with the previous month.
The actual result was better than the forecast, as there was a 0.3% rise in the UK Manufacturing production. Looking at the industrial production, there was a 0.1% rise, whereas the market was looking for a 0.1% decline.
The report added:
Production output fell by 0.5% for the three months to July 2019, compared with the three months to April 2019; falls in manufacturing (1.1%) and mining and quarrying (1.2%) were partially offset by rises in electricity and gas (2.8%) and water and waste (1.7%).
Overall, GBP/USD remains supported on dips and it could rise further above 1.2380 and 1.2400. However, EUR/USD might struggle to break the 1.1080 resistance area.
Upcoming Economic Releases
- UK Claimant Count Change August 2019 – Forecast 29.3K, versus 28.0K previous.
- UK ILO Unemployment Rate July 2019 (3M) – Forecast 3.9%, versus 3.9% previous.
- US NFIB Business Optimism Index March 2019 – Forecast 104.2, versus 104.7 previous.
