GBP/USD Forecast: Re-tests Expanding triangle resistance ahead of UK data

The broad based USD weakness in the NY session on Monday pushed the GBP/USD pair to a high of 1.5243 before profit taking led to a daily close at 1.5223. The softness in the USD remained intact in Aisa and pushed the GBP/USD to a high of 1.5257 levels. The investors now await the UK industrial and manufacturing production figures in the US.

UK industrial production – Downside surprise possible, but won’t be a shock

The UK industrial production is seen rising 0.3% MoM, although a downside surprise cannot be ruled out. The PMI figures for July and August highlighted the slowdown in the inflow of new work and export orders. The UK trade figures have also shown a sequential drop in the exports in the past few months. Thus, a downside surprise won’t be a surprise. Nevertheless, cable could fall back to 1.52. Further losses depend on whether the spot is able to sustain above the same while heading into the US session. A better-than-expected figure could open doors for 1.53.

Technicals – stuck at expanding triangle resistance

Sterling is having a tough time rising above 1.5248 (50% of Apr-Jun rally). The level also represents the expanding triangle (breached on the lower side in August) resistance seen on the daily chart. Failure to confirm a break above 1.5248 on the hourly chart could push the pair back to 1.52 levels, under which the losses could be extended to 1.5170. On the higher side, an hourly close above 1.5248 would expose 1.53 and 1.5319 (200-DMA) levels.

EUR/USD Analysis: Runs into falling trendline resistance

The EUR/USD pair rose Asian session low at 1.1172 to 1.1220 in European morning, then extended gains to 1.1232 at NY open before easing slightly to 1.1206, followed by a renewed buying which pushed the pair higher to 1.1280 near NY closing. The USD was offered across the board in the NY session yesterday after the Commerce Department showed that the US trade deficit widened to $48.33 billion in August from $41.81 billion in July, whose figure was revised from a previously estimated deficit of $41.90 billion.

With no major EU or US data due, the overall market’s appetite for the US dollars should continue to affect the movement in the EUR/USD pair today. Sentiment across the major equity markets will affect EUR and other funding currencies.

Technicals – Offered at falling trend line resistance

Euro was offered in Asia around the falling trend line resistance on the daily chart (represented by the Green line). The weakness also says the resistance zone of 1.1280-1.13 remains intact heading into the European session. Failure to take out 1.1280-1.13 would open doors for 1.12 levels, under which the spot could drop to 1.1135 (Oct 1 low). On the other side, a break above 1.13 could see the pair test the resistance at 1.1334 (blue line) followed by another trendline resistance at 1.1372.