Technical Bias: Slightly Bearish
Key Takeaways
• British pound collapses against the US dollar, as short-term market sentiment turned bearish.
• GBPUSD finds 100-day simple moving average, which is likely to act as a medium-term support.
• GBPUSD support seen at 1.6680 and resistance ahead at 1.6780.
The British pound traded lower against the US dollar yesterday as the recent UK economic data came as a disappointment, which turned the market sentiment in favor of sellers.
Technical Analysis
There is a descending channel formed on the daily timeframe for the GBPUSD pair. Yesterday, after a sharp drop the pair managed to find buyers around the 100-day simple moving average, which also coincides with the channel support area at 1.6698. If the pair fails to hold the mentioned area, then there are several support levels on the way down starting with the 1.6660 level. This level also represents the previous swing area, which is likely to act as a support moving ahead. Any further losses might take the pair towards the 50% Fibonacci retracement level of the last leg higher from the 1.6253 low to 1.6995 high, followed by the 61.8% fib. However, it is very likely that the pair might bounce from the current levels if 100-day SMA holds.
If the pair bounces from the current levels, then immediate resistance can be seen around the 1.6760 level, followed by the broken 50-day SMA.
CBI Distributive Trades Survey
Yesterday during the London session, the Confederation of British Industry (CBI) Distributive Trades Survey data was published by the Confederation of British Industry. The forecast was slated for a rise from 30 to 35. However, the outcome was disappointing, as the CBI Distributive Trades Survey fell to 16. This particular event added to the downside pressure taking the GBPUSD pair lower.
Overall, the market sentiment remains bearish, but we cannot deny that the pair trading around a key support area.
