August 13, 2013 – GBP/USD (daily chart) has retreated just short of major resistance around the 1.5600 level, which it approached late last week, and has reached back down to hit the 200-day moving average. That 1.5600-area resistance also coincided with a significant downtrend resistance line extending back to the high above 1.6300 in the beginning of the year, which connects the mid-June 1.5750 high, as well as a key 50% Fibonacci retracement level.
This tentative turn back to the downside for the currency pair signals a slight U.S. dollar comeback in the past several days that could be a precursor to further bearishness for GBP/USD. In this event, a breakdown below 1.5400 support could lead the way towards a potential resumption of the overall bearish trend, with major downside support objectives around 1.5000 and 1.4800. Any breakout above 1.5600 resistance would place this bearish trend in jeopardy, in which case further major resistance resides around the noted 1.5750 level.
James Chen, CMT
Chief Technical Strategist
City Index Group
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