GBPUSD is still in a downtrend, although the pair has pulled up from its recent slide and tested the falling trend line on its 1-hour time frame. This lines up with the 61.8% Fibonacci retracement level, adding to its strength as resistance.
Stochastic is already in the oversold level, which means that pound sellers need to take a break. Another quick pullback to the 1.5650 minor psychological resistance could be possible before the pair resumes its impulse wave to the previous lows.
GBPUSD Forex Outlook
A higher bounce could lead to a break past the trend line resistance and a higher correction to the 1.5700 major psychological level, which lines up with an area of interest. Further gains past this area would indicate that the downtrend is over and that a reversal is taking place.
On the other hand, a return in selling momentum could lead to a move until the 1.5550 minor psychological level around the previous lows or perhaps the creation of new ones. This could hinge on the outcome of the UK manufacturing production report, which is expected to show a bleak 0.2% uptick versus the previous 0.4% gain.
A weaker than expected reading could allow pound sellers to return to action and complete the impulse wave of the GBPUSD pair. A higher than expected figure could lead to an upside break, as this would reassure traders that the UK economy might be able to stay resilient despite external threats.
There are no other event risks for this GBPUSD trade for today as the next major catalyst might be the US retail sales report due on Wednesday. This could show a strong surge in spending, as the Thanksgiving sales probably sparked plenty of shopping ahead of the December holidays. Apart from that, the November NFP reading printed strong results, which also adds to retail sales support.
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