The GBP/USD currency pair appears to have found support just above the key support level at 1.3000 after a week of losses amid post-election sell-off.
The currency pair last week made a sharp spike to top 1.3500 but after the UK Conservative party garnered the majority in the exit poll, it has been on a downward movement until Friday when it appeared to bottom at around 1.3000, and later gaining marginally to 1.3022.
The pair is now trading within a previous ascending channel, which indicates that the bulls could re-take control from here on.
GBP/USD Fundamentals Overview
From a fundamental perspective, the GBP/USD currency pair is trading at the back of a busy period in both the UK and the US markets. In the UK, the preliminary Markit Manufacturing and Composite PMIs for December missed the expectations of 49.3 and 49.5 respectively with 47.4 and 49 on Monday.
The UK ILO Unemployment rate came out better than expected with 3.8% versus a predicted rate of 3.9% for the three months ended October 31. However, claimant count change missed with 28.8k versus 24.5k while average earnings including bonuses also came short of the expectation of 3.4% with 3.2% but earnings ex-bonuses beat with 3.5% versus 3.4%.
The UK CPI of 1.5% (Nov) (YoY) was better than the expected change of 1.4% but the PPI core output 1.1% missed 1.2%. The BoE held interest rates unchanged at 0.75% on Thursday, while the GDP (YoY) for Q3 beat the expected change of 1% with 1.1%.
In the US, the Markit Sevices and Composite PMIs beat expectations while the Manufacturing PMI was in line with ex[ectations. Housing Starts, Building Permits and Industrial Production also outperformed expectations as released during the week.
GBP/USD Technical Analysis (the 60-min Chart)
Technically, the GBP/USD currency pair appears to be trading under extreme bearish pressure following this week’s plunge. Today’s attempted rebound helped the pair to climb out of the oversold zone of the RSI indicator in the 60-min chart with the trendline support provided an upward boost.
Therefore, the bulls will be targeting short-term profits at around 1.3098 or higher at 1.3160. On the other hand, the bears will be looking to pounce ta around 1.3000 or lower at 1.2937 going into next week.
GBP/USD Technical Analysis (the Daily Chart)
In the daily chart, the GBP/USD currency pair appears to be trading under strong bullish pressure following the latest rebound off a descending trendline. The rebound appears to have set the pair on course to complete the XABCD pattern formation, which could ultimately trigger a reversal.
Therefore, the bulls will be targeting long-term profits at around 1.3227, 1.3610, 1.3778 or higher at 1.3985. On the other hand, the bears will hope for a continued pullback towards 1.2819, 1.2602 or lower at 1.2424.