Following the rise last Friday, on Monday the currency pair GBP/USD experienced correction, reaching the level of 1.6350 (moving average line of “Bollinger bands” indicator). On Monday the data on business activity index in the UK manufacturing sector for November became known; he index increased to 58.4 points, demonstrating significant growth of optimism in the British industrial sector. The news supported the Pound and helped slow down the correction. Today, business activity index in the UK construction sector will be released. According to forecast, index will slightly decrease, but will still remain at a high level.
Support and resistance
Currently, the pair is growing again; the price goes up along the moving average line of “Bollinger bands”, which acts as a support level. Key level is 1.6400, and in case of breakdown of this level, the price can continue upward movement to the level of 1.6435. On the four-hour chart technical indicators give mixed signals. Bollinger bands are rising, getting narrower, which is a sign of high volatility. MACD histogram is in the positive zone, its volumes are decreasing. Stochastic lines have crossed; they are rising up, forming a buy signal
In the current situation it makes sense to open long positions with profit taking at the level of 1.6435.
Analyst of LiteForex Group of Companies