The GBP/USD pair is trading in the sideways manner in the range of 1.39-1.3960 since the early NY session yesterday. The bears appear to be on the sidelines after having pushed the pair lower by more than 500 pips in the first three trading days of the week.
_20160225100737.png "GBPUSD 15-min chart")
Daily Chart
_20160225100808.png "GBPUSD daily chart")
500-pip fall
The fall began from 1.44 levels in early Asia on Monday after London Mayor switched sides in favour of Brexit. The heightened fears that Britons may vote against EU membership also saw major ratings agency talk about a potential UK rating downgrade. Consequently, the pair tumbled to a low of 1.3878 on Wednesday before turning sideways in the above mentioned range.GDP left unrevised
The UK Q4 GDP was left unrevised at 0.5% q/q and 1.9% y/y. The drop in the business investment is a concern; but the one which is largely priced-in. It is not surprising given the slowdown in the manufacturing sector and drop in exports. Overall, the data received no attention from the trading community.Traders may overlook durable goods report
US durable goods are seen rebounding in January and that should be good news for USD bulls. However, traders may overlook the data since the Fed’s decision to hike rates is more dependent on the financial market volatility and labour market performance. However, a weaker-than-expected data would be enough to trigger a technical correction in Cable ahead of the weekend.Technicals – Awaits breakout from sideways channel seen on 15-min chart
15-min chart- The currency has established a 60-pip range of 1.39-1.3960 on 15-min chart.
- A break above 1.3960 would open doors for a quick spike to 1.40-1.4060
- On the other hand, a break below 1.39 would open doors for a slide to 1.3840
- However, the RIS is now overold on the 4-hr chart, hence downside move may fall short of 1.3860.
Daily Chart
- Spot is finding support at 1.3924 (76.4% Fibo expansion of July 2014 high-April 2015 low-June 2015 high).
- As long as the pair is above 1.3924, odds of a bullish break from the sideways channel seen on 15-min are high.
- Repeated daily close below 1.3924 would shift risk in favor of a slide to next major support at 1.3654 (March 2009 low).
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