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GBP/USD Holding Key Support, Likely To Rise Further

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Technical analysis of Forex market

Key Highlights

  • GBP/USD remained well supported above the 1.2880 area.
  • A major bullish trend line is forming with support near 1.2875 on the 4-hours chart.
  • The UK Manufacturing PMI increased from 48.3 to 48.9 in Nov 2019.
  • The UK Construction PMI could rise from 44.2 to 44.5 in Nov 2019.

GBP/USD Technical Analysis

After forming a solid support near 1.2825, the British Pound started a decent increase against the US Dollar. GBP/USD broke the 1.2880 and 1.2900 resistance levels to move into a positive zone.

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Looking at the 4-hours chart, the pair even broke the 1.2920 resistance area, the 100 simple moving average (red), and the 200 simple moving average (green).

Besides, there was a break above the 50% Fib retracement level of the downward move from the 1.2985 high to 1.2824 low. However, the pair struggled to gain strength above the 1.2945 and 1.2950 resistance levels.

If there is a clear close above the 1.2950 resistance area, the pair could even surpass the 1.2980 resistance area in the coming sessions. The next resistance is near the 1.3000 handle.

On the downside, there is a strong support forming near the 1.2880 level. Besides, there is a major bullish trend line forming with support near 1.2875 on the same chart. If there is a downside break below the 1.2875 support, the pair could retest the 1.2825 support area.

Fundamentally, the UK Manufacturing Purchasing Managers Index (PMI) for Nov 2019 was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was looking for no change from the last reading of 48.3.

The actual result was above the market forecast, as the UK Manufacturing PMI increased from 48.3 to 48.8. However, it was still below the expansion zone of 50.0.

The report added:

The UK manufacturing downturn continued in November, as businesses responded to the delay to Brexit and a fresh injection of uncertainty from the forthcoming general election.

Overall, GBP/USD is holding important supports and it could rise above 1.2950. Besides, there are a few recovery signs visible for EUR/USD above 1.0980.

Upcoming Economic Releases

  • Swiss CPI for Nov 2019 (YoY) – Forecast -0.1%, versus -0.3% previous.
  • UK’s Construction PMI for Nov 2019 – Forecast 44.5, versus 44.2 previous.