GBP/USD: investors have put trust in the USD again
As expected, the pair GBP/USD rapidly declined on Thursday. Weakness of the currency was caused by the fact that it is significantly overbought. Plus to this additional pressure on the pair was provided by the rise in the USD. On Thursday positive data on the US labour market was released: number of initial applications for unemployment benefits has reduced. PMI in the UK and business activity index in the US manufacturing sector will become known today.
Support and resistance
If British fundamental data is negative, the pair will fall to the recent local lows of 1.5920 (level of 23.6% Fibonacci). The U.S. Open Market Committee warms up demand for the USD, giving promises to terminate QE program. In the medium-term the pair will continue to decline, target for the short positions are the levels of 1.5750 (highs of June) и 1.5550 (level 50% Fibonacci).
Indicators: MACD, Ichimoku and Bollinger Bands confirm forecast of downward movement. MACD histogram fell below the signal line. The price has broken the lines Tenkan and Kijun from top to bottom as well as the average line of “Bollinger bands” indicator.
Support levels: 1.6000, 1.5920, 1.5880 and 1.5750.
Resistance levels: 1.6100, 1.6200 and 1.6260.
Given the indicators it is recommended to place pending short positions from the level of 1.6100 with profit taking at the level of 1.5920.
Analyst of LiteForex Group of Companies