The British pound was hovering at its multi month low at 1.5900 till Friday, after which the bulls entered the market this week on Monday following a good improvement in the construction sector of the U.K. economy. Plus, as mentioned in our previous analysis that if the Services PMI data comes out to be impressive, then that short term gains of Monday could extend further and may take the pair further up and so it did. The Services sector expanded in the U.K. economy much better than expected in the past month, hence regaining investors’ confidence in the British pound.
After gaining 200 points in just 2 days, the GBP/USD is trading at 1.6085 in the Asian session on Wednesday, where it has completed its 50% bullish correction of the bearish move it witnessed last week. Chances are that the pair would gain around 20 points more to complete its 61.8% retracement on a Fibonacci retracement scale, and that would be the point where sellers might start entering the market.
Therefore, those who want to sell the pair can enter now or at 1.6118 and can keep a tight stop loss, but the overall trend could become bullish if the manufacturing production data for the past month comes out to be pleasing as well.
As long as the pair is trading above 1.6051 critical level, the pair is good for buying, below this level sellers would enter more in the market.
Watch out Euro Traders
The euro made a zig zag movement on Tuesday where it is seeing its resistance level at 1.3531, breaking of which could lift the pair further up to 1.3545 and 1.3580 where sell orders might start triggering again. However, investors are eying on key economic indicators due today for the euro including European retail sales, German factory orders, and Spanish and Italian services PMI.
Gold is stuck at the 1313 level and has been stagnant so far this week, since investors are looking forward the big data that would be released on Friday after 2 months, i.e. NFP and the U.S. unemployment. A lot depends on this data and thus could shape the short to medium term outlook for the metal. The support is still there at 1307 and 1301 levels; hence buying is safe above these levels.
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