The Great Britain Pound (GBP) extended upside movement against the US Dollar (USD) on Wednesday after leaving an indecision doji on the daily chart yesterday thus apparently kicking off the consolidation phase. The sentiment is very bearish due to Lower Low in the recent dip amid Scottish independence news.
As of this writing, the pair is being traded around 1.6118. A support can be seen near 1.6060, the swing low of yesterday ahead of 1.6000, a monster support due to the confluence of 200 Weekly Simple Moving Average (SMA) and 50% fib level of the last major rally.
On the upside, the pair is likely to face a hurdle near 1.6250, a major horizontal support ahead of 1.6489, the 38.2% fib level and then 1.6621-43, the high of the recent consolidation phase & 50% fib level as demonstrated in the above chat. The sentiment will remain bearish as far as the 1.6650 resistance area is intact.
Industrial production in Britain increased by 1.7% during July as compared to 1.2% in the month before, up beating the average forecast of 1.3%, a government report revealed on Tuesday. Generally speaking, higher industrial production readings are considered positive for the UK economy, thus a better than expected actual outcome spurred moderate bullish momentum in the price of cable.
According to media reports, the Scotland is expected to announce independence on September 18 in a landmark referendum. If it happens, then cable may nosedive by at least 15%, making the current correction was as the worst losing streak in last many years.
Considering the overall technical and fundamental outlook, selling the pair on a daily closing below the 1.6000 support area could be a good strategy in short to medium term as described above.