Yesterday’s growth in the pair was caused by positive British macro-economic statistics. Business activity index in the service sector exceeded optimistic forecast by more than 2%, amounting to 62.5%. Ambiguous data from the USA provided additional support to the pair, enabling the rise up to resistance level of 1.6100.
It is expected that the data on industrial production and output in manufacturing industry of the UK will become known. Leading indicator index in the USA and changes in the American oil inventories will be also released.
Support and resistance
Breakdown of the key resistance level of 1.6100 will trigger the beginning of the “bullish” trend with the target of 1.6260. However, in the medium-term the USD rate is likely to strengthen and the pair GBP/USD can gradually fall to support level of 1.5750 (lows of June) and 1.5550 (level 50% Fibonacci).
Indicators: MACD, Ichimoku and Bollinger Bands confirm the forecast of downtrend. MACD histogram fell below the signal line and is directed downward, moving to the negative zone. The lines Tenkan and Kijun have merged above the cloud prior to reversal pattern. The price has pushed off from the average line of Bollinger bands and started to go down to the bottom line (1.5880).
Support levels: 1.6100, 1.6200 and 1.6260.
Resistance levels: 1.5920, 1.5750 and 1.5550.
In the current situation it makes sense to place short positions with the target of 1.5750. Pending sell orders can be placed from the levels of 1.6200 and 1.6260.
Analyst of LiteForex Group of Companies