GBP/USD Forecast: Retreating from critical Fibonacci resistance

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.3128

CBI Industrial Trends Survey on Orders provided some encouraging hints.
UK PM Johnson confident the UK and the EU could reach a deal before year-end.
GBP/USD could extend its recovery on acceleration through 1.3150.

The British Pound was the best performer against the greenback this Wednesday, with the pair hitting a daily high of 1.3152, its highest in two weeks. The rally was triggered by a slightly better than expected CBI Industrial Trends Survey on Orders, which came in at -22, improving from -28 and beating the market’s expectation of -23. The report also showed that the Manufacturing Output Expectations rose to its highest reading since July at 4 and the Quarterly Business Situation Index jumped to its best level in more than five years at 23 from -44 previously. The dollar’s broad weakness added to the positive momentum of the pair.

UK PM Johnson was later on the wires, stating that he is confident a trade deal with the EU could be achieved before year-end. The House of Lords finally approved the Brexit bill during the US afternoon, but the news passed unnoticed as Brexit has already been priced in. The UK macroeconomic calendar will be empty this Thursday.

GBP/USD short-term technical outlook

The GBP/USD pair stabilized around 1.3130, just below the 38.2% retracement of its latest daily slide. The upside potential remains limited, although the risk is skewed to the upside in the short-term, as, in the 4-hour chart, the pair has managed to recover above all of its moving averages, which anyway remain directionless. Technical indicators in the mentioned chart are retreating from fresh January highs within positive levels, but their directional strength is limited. Renewed buying interest beyond 1.3150 could see the pair extending its recovery toward 1.3212, where the pair has the 50% retracement of the mentioned decline and January 7 daily high.

Support levels: 1.3080 1.3040 1.3000

Resistance levels: 1.3150 1.3185 1.3215

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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