GBP/USD: UK economic recovery will strengthen Pound
1. Current trend of GBP/USD
Thanks to favourable fundamental data the Pound has started the week with the rise. Construction PMI has increased up to the level of 57.2 points, exceeding the expectations. Besides, the demand for the Pound is growing stronger due to the economic recovery. The pair has bounced off the lower border of the price channel and is strengthening now.
Today we don’t expect high volatility because of the lack of important releases in trader’s calendar. Though at the beginning of the American session the attention should be paid to the Manufacturing PMI and Construction Spending publications. On Thursday BOE interest rate will be released; experts predict that the rate will remain the same but Carney speech may support national currency.
2. Important levels: support and resistance
We expect the correction within the range of 1.5500-1.5600. On Thursday and Friday after US data release the pair will go down to the key support level 1.5500, and then GBP/USD will return to the rise. In medium-term scenario British currency will raise against Dollar.
On the daily chart the price has reached the lower border of the channel and is going to rise up to the level of 1.5750, in medium-term scenario — to 1.5880.
3. Best exit/entry points
I would recommend to open long trades with Take Profit orders at 1.5650, 1.5750. Pending orders can be placed at 1.5500 with targets at 1.5750; in medium-term scenario profit can be taken at the level of 1.5880.
4. Supporting facts
On the daily chart MACD histogram is in positive zone under the signal line and is directed downwards, indicating downward correction and a possibility of further rise.
Dmitry Likhachev
Analyst of LiteForex Group of Companies