Marshall Gittler
Trading Analysis
GBP/USD
The dollar traded mixed against the other G10 currencies during the European morning Tuesday. It outperformed CHF, SEK, JPY and NOK in that order, while it was lower versus NZD, AUD and GBP. The greenback traded in a quiet mode against EUR and CAD.
The pound was among the winners after the 1st estimate of the UK GDP show that growth accelerated to +0.7% qoq in Q2 from +0.4% qoq in Q1. The figure was in line with market expectations, but given the weak industrial production in April and May and the poor retail sales figures in Q2, there was a high probability of a disappointment. Accelerating growth alongside accelerating wages and the recent hawkish comments by several central bank members could even bring forward expectations for a rate hike. EUR/GBP fell below the key support line of 0.7100 following the release. This raises some concerns on the continuation of the short-term uptrend started on the 17th of July. For now I would expect the negative move to continue and perhaps challenge the 0.7050 barrier in the near future.
GBP/USD traded higher during the European morning Tuesday following the UK GDP data. The rate emerged above the resistance (now turned into support) barrier of 1.5595 (S1), marked by yesterday's peak, and I would expect it to continue higher and challenge the next hurdle of 1.5670 (R1). Our short-term oscillators detect positive momentum and support the case for the continuation of the bullish wave. The RSI moved above its 50 line and is now headed towards its 70 barrier, while the MACD, already above its trigger line, has turned positive. As for the bigger picture, on the 24th of July, the rate rebounded from 1.5465 (S1), which currently coincides with the 80-day exponential moving average. This makes me believe that the overall picture remains somewhat positive and that there is still the likelihood for the rate to trade higher in the not-to-distant future.
Support: 1.5595 (S1), 1.5530 (S2), 1.5465 (S3)
Resistance: 1.5670 (R1), 1.5735 (R2), 1.5780 (R3)
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