Key Highlights
- GBP/USD traded to a new 2020 low at 1.2871 before correcting higher.
- There was a break above a connecting bearish trend line with resistance near 1.2920 on the 4-hours chart.
- The UK Industrial Production might increase 0.3% in Dec 2019 (MoM).
- The UK GDP could remain flat in Q4 2019 (Preliminary) (QoQ), down from the last +0.4%.
GBP/USD Technical Analysis
This past week, the British started a strong decline below 1.3050 against the US Dollar. GBP/USD broke many key supports near the 1.3000 handle to enter a bearish zone.
Looking at the 4-hours chart, the pair traded below the 1.2980 support area, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).
Finally, it spiked below the 1.2920 support and traded to a new 2020 low at 1.2871. Recently, there was an upside correction from the 1.2871 low.
The pair climbed above the 23.6% Fib retracement level of the recent decline from the 1.3069 high to 1.2871 low. Moreover, there was a break above a connecting bearish trend line with resistance near 1.2920.
However, the pair is likely to face a strong resistance near the 1.2970 and 1.2980 levels. Besides, the 50% Fib retracement level of the recent decline from the 1.3069 high to 1.2871 low is near 1.2970.
The main hurdle is now near the 1.3000 level, above which the pair could recover above the 100 SMA. Conversely, if GBP/USD fails to continue above the 1.2970 or 1.3000, it is likely to resume its decline.
Overall, GBP/USD is recovering, but it is facing a strong resistance near 1.2970 and 1.3000. Conversely, EUR/USD extended its decline below the 1.0950 area.
Upcoming Economic Releases
- UK Industrial Production for Dec 2019 (MoM) – Forecast +0.3%, versus -1.2% previous.
- UK Manufacturing Production for Dec 2019 (MoM) – Forecast +0.5%, versus -1.7% previous.
- UK GDP Q4 2019 (Preliminary) (QoQ) – Forecast 0%, versus +0.4% previous.
