GBP/USD Consolidates on UK GDP Miss
- GBP/USD Consolidates on UK GDP Miss
- Daily Resistance Found at 1.3048; Support 1.2888
- IG Client Sentiment Reads -1.43; 59% Net-Short
The GBP/USD continues to consolidate off of its yearly highs, as UK GDP figures were reported under expectations this morning. UK GDP (YoY) (1Q P) was expected in at 2.1% but released at an actual 2.0%. Technically, this morning’s trading has pushed the GBP/USD back below its 10 day EMA (exponential moving average) at 1.2963. However despite this decline, prices still remain inside of last Thursday’s daily candle.
In the event prices continue to decline, traders should first look for the GBP/USD to close below the previously mentioned 10 day EMA. A move of this nature should also be followed by a breakout below last Thursdays low at 1.2888. In this bearish scenario, traders may then look for the GBP/USD to test the standing monthly low at 1.2830. If prices retrace higher however, traders should watch for the GBP/USD to close above the 10 day EMA and then challenge yearly highs above 1.3048. A breakout above this point would suggest a continuation of the GBP/USD’s ongoing long term uptrend.
GBP/USD Daily Chart & Averages
Why and how do we use IG Client Sentiment in trading? See our guide.
Sentiment totals for the GBP/USD remain net negative, with IG Client Sentiment reading at -1.43. This suggests that 59% of traders are currently short the pair. When read as a contrarian indicator, this negative value suggests a bullish bias for the currency pair. If prices breakout lower below 1.2888, traders should watch for sentiment figures to shift back towards a more neutral value and potentially flip positive. Alternatively if the GBP/USD’s bullish trend continues, traders should look for sentiment to move towards new negative extremes of -2.0 or more.
--- Written by Walker, Analyst for DailyFX.com
To Receive Walkers’ analysis directly via email, please SIGN UP HERE
See Walker’s most recent articles at hisBio Page.
Contact and Follow Walker on Twitter @WEnglandFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.