GBP/USD: American currency is likely to strengthen

GBP/USD: American currency is likely to strengthen

Current trend

Following significant growth last week the pair GBP/USD has corrected downward. The decline was triggered by the data on mortgage lending in the UK (forecast:45.2 thousand, actual value:42.8 thousand.) Meanwhile the USD was supported by the news about agreement on oil delivery expansion between Iran and USA.
Today the pair is trading in the narrow channel of 1.6140-1.6170. Market volatility will be added by the following fundamentals events: speech of the head of the Bank of England Mark Carney and the meeting of the Parliament. Important US construction sector statistics will be also released.

Support and resistance

It is likely that the price will repeatedly test resistance level of 1.6260 but will not succeed in it and reverse downward. Strong catalysts are required in order to break down key resistance level. Favourable US macro-economic data can cause movement in the pair to support level of 1.6000. In the medium-term the pair will go down to the level of 1.5850. MACD indicator on the daily chart demonstrates divergence, which is a sign of trend reversal.

Support levels: 1.6100, 1.6000, 1.5920 and 1.5850.
Resistance levels: 1.6200, 1.6260 and 1.6300.

Trading tips

In the current situation it is recommended to place sell orders with profit taking near the levels of 1.5920-1.5850.

Dmitry Likhachev
Analyst of LiteForex Group of Companies

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