GBP/USD – Re-test of 1.46 handle seems likely

FX:GBPUSD   British Pound/U.S. Dollar
GBP/USD             pair clocked a high of 1.4552 only to retreat to 1.4549 (23.6% of the move from 1.3835-1.4552 levels). Broad based USD selling in early Europe helped fuel the rally in Cable. However, the sellers came-in after Markit data showed UK PMI manufacturing fell to contraction territory (below 50.00) for the first time in three years.

Furthermore, broad based technical correction in the USD also weighed over the pair. The result was a sharp fall to 1.4529 levels. The currency pair dropped to 1. 4519             levels in Asia today before recovering to trade to around 1.4550 levels.

The data docket in UK is light with just construction PMI due for release. Markets expect construction PMI to show the pace of expansion remain largely unchanged in April. However, we should be ready for a weaker-than-expected figure since Brexit fears may have forced builders/buyers to delay spending. Across the pond, US ADP employment figure is due for release.

Daily Chart

Support – 1.4529, 1.4459, 1. 44            

Resistance – 1.4593, 1.4636, 1.474

  • Pair’s rebound from 10-DMA support followed by a move above 1.4548 (23.6% of 1.3835-1.4770) indicates prices could be heading higher to 1.46 and 1.4636 (38.2% of 1.5930-1.3835).
  • Daily RSI still sits well above 50.00 levels, indicating possibility of a bullish rebound from yesterday’s sell-off.
  • On the lower side, failure to sustain above 1.4548 followed by a dip below 1.4514 (Mar 18 high) would signal continuation of yesterday’s sell-off. Below 1.4514, support at 1.4436 stands exposed.
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