GBP/USD in the bearish channel
Authored by Kira Iukhtenko, FBS
GBP/USD failed to fix above the $1.6800 mark for long, slipping to $1.6765 on Tuesday. UK released pretty strong manufacturing and industrial production figures today, with both indicators rising by 0.4% m/m in April. However, the pound was not really inspired by the figures, pulling down from the upper border of the May/June bearish channel.
The today’s market reaction confirms that the pair remains under bearish dominance and is set for a deeper decline in the near term. Market is gradually building long USD positions, expecting the US economy to recover following the dip in Q1. Support for GBP/USD lies at $1.6730, $1.6700 and $1.6650. Upside is now capped by the $1.6780/90 resistance.
The GBP strength is now better seen through the EUR/GBP cross that slipped to $0.8050 today. Pound remains supported versus the euro following the euro zone’s policy easing announced last week. The cross is now trading at the lowest level since late 2012. Bearish pressure on the cross could accelerate if the BoE rate expectations increase.
Later in the day the market attention will switch to the NIESR UK GDP estimate. On Wednesday watch the UK labor market figures.
Chart. H4 GBP/USD