GBP/USD Runs into Resistance and Disappointing Manufacturing Data

0
148
GBP/USD Runs into Resistance and Disappointing Manufacturing Data

The GBP/USD started this week with a new low on the year at 1.5540, then immediately rebounded. The pullback was due to meet resistance around 1.5660-1.5680, where we have a the 100- and 50-hour SMA in the 4H chart as well as a falling speedline coming down from the 1.5825 pivot in November.

GBP/USD 4H Chart 12/9
gbpusd 4h chart 12/9
(click to enlarge)

Resistance: 
The 4H chart shows that price has indeed pushed at the 1.5680 area (up to 1.5695), and briefly cracked the 200- and 100-period SMAs as well as the falling speedline.

During early 12/9 European session, UK’s Office of National Statistics reported worse than expected manufacturing production data:

UK Manufacturing Production m/m (October): -0.7%
Forecast: 0.2%
September: 0.6%

This is the second negative and second worse reading this year, reflecting some shakiness to the UK’s recovery. However, being for October, this data point is not likely going to have that much impact except within the session. So far, the market is showing respect to the resistance, and the poor manufacturing data point might have helped it make the turn around.

USD to be the Driver:
The trajectory of GBP/USD for the rest of this week is likely going to be a USD-story for the most part. The rally in GBP/USD so far this week was accompanied by one in EUR/USD and a dip in USD/JPY, showing that it has been a USD-story. Also, we are not going to have any key fundamental factors out of the UK to shake up the sterling pound.

The Correction Scenario: Now, let’s say today’s resistance around 1.5695 fails to hold. The next line of defense for the bearish outlook, will be around 1.5735-40, which is a common resistance seen in the 4H chart. On the daily chart, we can see a falling trendline from July reinforcing this resistance area. A break above 1.5750 might signal a shift from a bearish mode to a consolidation or even bullish correction mode.

GBP/USD Daily Chart 12/9
gbpusd daily chart 12/9
(click to enlarge)

Previous Post by Author: Gold Trying to Climb Back Above 1200

SHARE
Previous articleCryptocurrency Trading News: Bitcoin, Litecoin Crash below Key Support Levels
Next articleCan EUR/USD Maintain Upward Trend?
Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.