GBPUSD Plunges After UK GDP Data

The Great Britain Pound (GBP) slid down against the US Dollar (USD) on Friday, decreasing the price of GBPUSD to less than 1.2900 following some key economic events. The technical bias has however turned bullish because of a higher high in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 1.2886. A support can be noted around 1.2844 (an immediate trendline support) ahead of 1.2795 (the 23.6% fib level) and then 1.2700 (the confluence of horizontal support as well as psychological number) as demonstrated in the given below chart.

On the upside, a hurdle may be noted around 1.2997 (a short-term horizontal resistance area) ahead of 1.3047 (the high of the recent upside wave) and then 1.3100 (the psychological number). The technical bias shall remain bullish as long as the 1.2700 support area is intact.

UK GDP Slows Down

The UK’s GDP growth in the first quarter of 2017 has been unexpectedly revised down to 0.2 per cent, in news that will compound fears that the economy is slowing as the impact of last June’s Brexit vote finally hits home. City of London analysts had expected no change in the Office for National Statistics’ initial estimate last month of 0.3 per cent growth. The latest disappointing estimate for GDP growth follows robust growth of 0.7 per cent in the final quarter of 2016 and 0.5 per cent in the quarter immediately following the referendum when the economy seemed to shrug off the impact of the vote and widespread predictions of a recession.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels may be a good strategy in short to medium term.

 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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