GBP/USD Upsides Remain Capped By 1.3500

Key Highlights

• The British Pound remained in a bearish zone during the past few days and declined below 1.3500 against the US Dollar.
• There is a key bearish trend line in place with resistance at 1.3525 on the 4-hours chart of GBP/USD.
• Chicago Fed National Activity Index (CFNAI) increased from the last revised reading of 0.32 to 0.34 in April 2018.
• Today, UK’s Public Sector Net Borrowing for April 2018 will be released, which is forecasted to rise from £-0.262B to £7.000B.

GBPUSD Technical Analysis

The British Pound declined during the past few days after it failed to move above the 1.3620 resistance against the US Dollar. The GBP/USD pair declined heavily and moved below the 1.3500 and 1.3450 support levels.

Looking at the 4-hours chart, the pair recently broke the 1.3450 support and even moved below the 1.3400 handle. It seems like buyers are under a lot of pressure, capping upsides in GBP/USD.

The broken support levels at 1.3450 and 1.3500 are likely to act as resistances if the pair starts an upside correction. Moreover, there is also a key bearish trend line in place with resistance at 1.3525 on the 4-hours chart of GBP/USD.

A successful close above the trend line resistance may perhaps decrease the current bearish pressure and the pair may recover to 1.3600 and 1.3620.

On the flip side, if the pair declined further below 1.3380, the next support sits near 1.3350, followed by 1.3320.

Recently in the US, the Chicago Fed National Activity Index (CFNAI) for April 2018 was released. The market was looking for a rise from the last reading of 0.10 to 0.14.

However, the actual result was better as there was a rise in the index from the last revised reading of 0.32 to 0.34 in April 2018.

The US Dollar is currently positioned nicely in a bullish zone and any recoveries in EUR/USD and GBP/USD are likely to be capped in the near term.

Economic Releases to Watch Today

• UK’s Public Sector Net Borrowing April 2018 – Forecast £7.000B, versus £-0.262B previous.
• UK’s CBI Industrial Trends Survey Orders May 2018 (MoM) – Forecast 4, versus 4 previous.