GBP/USD – Upside Favored If Pair Holds Key 200-Day SMA
Technical Bias: Bullish
- British pound continued to move lower against the US dollar.
- Break of the 1.6800 was critical, as can take the GBPUSD pair lower moving ahead as it approaches an important support area.
- GBPUSD support seen at 1.6740 and resistance ahead at 1.6820.
The US dollar recently gained heavily against the British pound, as the latter traded lower against most other major currencies. However, sellers need to be very careful, as the GBPUSD is heading towards a monster support area.
There is a crucial bullish trend line formed on the daily timeframe for the GBPUSD pair, which acted as support previously. The pair is again heading towards this trend line. The most important thing to note this time is that the highlighted trend line is coinciding with the 200-day simple moving average. Moreover, the 61.8% Fibonacci retracement level of the last leg higher from the 1.6463 low to 1.7192 high also lies around the same area. So, the 1.6740 support level holds a lot of importance in the short term. If the GBPUSD pair moves a bit lower from the current levels, the buyers are most likely to appear around the mentioned level. A break and close below the 200-day SMA might expose a run towards the last low of 1.6463.
On the upside, initial resistance can be seen around the swing area of 1.6800-20. If the pair gains momentum above the stated area, then a move towards the 1.6900 resistance area is possible in the near term.
US Federal Budget Balance
Later during the NY session, the US Federal Budget Balance data will be published by the Department of the Treasury. If the outcome misses the expectation, then the GBPUSD might gain traction moving ahead.
Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets
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