GBP/USD faced another rejection near the key swing level on Friday following the Britain’s Gross Domestic Product (GDP) release. The sentiment remains bullish due to Higher High and Higher Low in the recent wave.
As of this writing, the pair is being traded near 1.7024. A hurdle can be noted around 1.7062, the swing high of the recent upside rally as demonstrated in the following chart. A break above the 1.7062 resistance area could incite a renewed buying interest, validating a rally above the 1.7100 handle.
On the downside, the pair is expected to find a support near 1.6976, the 23.6% fib level ahead of 1.6922, the horizontal support as well as 38.2% fib level and then 1.6879, the 50% fib level. The sentiment will remain bullish as far as the 1.6696 support area is intact.
Britain’s economy grew at 3.0% during the first quarter of the ongoing year as compared to 2.7% in the same quarter of the year before, a report by the National Statistics department revealed today down beating the average forecast of 3.1%. Generally speaking, higher GDP reading is considered positive for the economy hence a worse than expected actual outcome is seen as bearish for the pair and vice versa.
The current account deficit of Britain remained GBP 18.495B in the first quarter as compared to GBP 23.519B in the quarter before, a government report revealed today again down beating the average forecast of GBP 17.500B. Generally speaking, higher account deficit is considered negative for the economy, hence a worse than expected actual outcome spurs bearish momentum in cable.
Considering the overall technical and fundamental outlook, selling the pair around the current levels appears to be a good strategy. The trade should however be stopped out on a daily closing above the 1.7062 resistance area.