Key Highlights
- The British Pound gained momentum recently and broke the 1.2900 resistance against the US Dollar.
- There are two bullish trend lines formed with support at 1.2780 on the 4-hours chart of GBP/USD.
- China’s Trade Balance in Dec 2018 posted a surplus of $57.06B, more than the $51.53B forecast.
- The US Producer Price Index for Dec 2018 will be released today, which could decline 0.1% (MoM).
GBPUSD Technical Analysis
There were solid gains in the British Pound in the past few days above the 1.2700 and 1.2800 levels against the US Dollar. The GBP/USD pair even broke the 1.2900 resistance recently before correcting a few pips.
Looking at the 4-hours chart, the pair climbed higher above the 1.2770 and 1.2800 resistance levels. There was even a close above the 1.2800 pivot area and the 100 simple moving average (red, 4-hours), opening the doors for more gains.
The pair spiked towards the 1.2940 level and later started a downside correction. On the downside, the previous resistance at 1.2800 may act as a strong support for buyers. It also coincides with the 50% Fib retracement level of the last wave from the 1.2709 low to 1.2930 high.
Besides, there are two bullish trend lines formed with support at 1.2780 on the same chart. Therefore, dips in GBP/USD remain supported near the 1.2800 and 1.2780 levels, below which it could decline to 1.2700.
On the upside, an initial resistance is at 1.2930 and 1.2940, above which the pair is likely to climb sharply towards the 1.2960 and 1.3000 resistance levels.
Fundamentally, the Chinese Trade Balance report for Dec 2018 was released by the General Administration of Customs of the People’s Republic of China. The market was looking for a trade surplus of $51.53B in Dec 2018, compared with the last $44.71B.
However, the actual result was better than the forecast as there was a surplus of $57.06B. On the negative side, exports of goods and services declined 4.4% in Dec 2018 (YoY), compared with the +3.0% forecast.
The market sentiment was positive for GBP/USD and EUR/USD, but there could be short term dips before a fresh upward move.
Economic Releases to Watch Today
- US Producer Price Index Dec 2018 (MoM) – Forecast -0.1%, versus +0.1% previous.
- US Producer Price Index Dec 2018 (YoY) – Forecast +2.5%, versus +2.5% previous.
- US IBD/TIPP Economic Optimism Index for Jan 2019 (MoM) – Forecast 53.1, versus 52.6 previous.
