The GBP/USD pair advanced up to 1.5411 on Tuesday, with no actual catalyst behind the recovery, except the due correction after falling steadily for two weeks.
The pair reached then the 38.2% retracement of the 1.5817/1.5161 by the pip late Tuesday, and remained below it until the release of the first batch of relevant data in the UK, which resulted quite discouraging. The Goods Trade Balance for July presented a larger-than-expected deficit of £-3.461B against the £-1.900B expected, whilst Industrial and Manufacturing Production shrunk by 0.4% and 0.8% respectively.
The poor news sent the GBP/USD pair down to 1.5349, although so far, it has managed to bounce some. Nevertheless, the 4 hours chart shows that the technical indicators continue heading south from overbought levels, suggesting the downward movement may extend during the upcoming hours. In the same chart, the 20 SMA heads sharply higher around 1.5280, whilst the technical indicators are still well above their mid-lines, all of which limits the bearish strength at the time being.
Below the mentioned daily lows, the decline can extend down to 1.5315 the 23.6% retracement of the mentioned rally, where buying interest is expected to defend the downside. The weekly high and Fibonacci resistance at 1.5410 is the level to break to confirm additional gains, with an immediate resistance then, and probable bullish target, at 1.5455, followed later by 1.5490, the 50% retracement of the same rally.
View the live chart of the GBP/USD
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