GBPUSD approaching key resistance

GBP/USD rallied from channel support around lows of late May to test channel resistance on Thursday of last week. The pair fell short of the 200-day simple moving average (SMA) which currently converges with the rising channel top and a potential correction within the channel may be likely. Tomorrow, April industrial and manufacturing production figures are due out of the UK and are both are expected to show a decline. Employment data is due the following day with the April ILO unemployment rate expected to remain steady at 7.8% and May jobless claims change forecast to show a reduction of -5K. If data disappoints, the GBP may weaken while a positive surprise is likely to see the pair possibly retest the channel top and 200-day SMA.

While GBP/USD remains below the 200-day SMA, which currently comes in around the 1.57 figure, we expect a correction lower. The 38.2% Fibonacci retracement (of the 2013 range) around 1.5425 is notable support ahead of the 55- and 100-day SMA’s which reside just above the 1.53 figure. A sustained break above the 200-day would suggest more upside potential and bring the 1.58 level into focus (61.8% Fibonacci retracement).

07.06.2013