GBP/USD 4H chart 1/30/2013 9:05AM EST
Pullback, resistance: GBP/USD fell to start the week, coming down to 1.5673 before finding some demand. It has since slowly crept back up for the past couple of sessions, and is trading back at the close of last week, near the 1.58 handle. This psychological level is also reinforced by a falling trendline as resistance.
GDP, FOMC: US advanced GDP reading for December 2012 was dismal. According to the Bureau of Economic Analysis (BEA), the Dec. GDP reading was -0.1%, the worst reading since Dec. 2009. Forexfactory.com showed an avg. forecast of 1.1% after an upwardly revised 3.1% for Q3. This news shook the JPY-crosses, but not that much in the USD-crosses. GBP/USD pretty much maintained its bullish stance it had for the last 2 sessions, and is testing this 1.58/trendline.
However, there is another risk event that the market might be waiting on before putting more steam behind cable, or doing the opposite. The FOMC statement will come out at 2:15PM EST. Any directional clues before that might be just noise.
Correction scenario: A break above 1.58 is a sign that there is a bit of correction in GBP/USD going on against the January decline. Watch for resistance at 1.5892, 38.2% retracement at 1.5945, and 50% at 1.6028. A general expectation to 1.60 can be considered if the market indeed pushes above 1.58/trendline, and shows support above 1.5775 area.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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