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GBP/USD

 

The GBP/USD is trading  around 1.2500 level (currently above this level ). A consolidation above the 1.2500 handle, would clear the way to more gains and target 1.2550 and 1.2600. UK employment data offered a mix pictured on Wednesday, the unemployment rate fell to the lowest level in more than 40 years ( jobs openings hit a record high but wage growth rose at the slowest pace since 2014). This are positive news for GBP but wages are a real concern for the BoE and should continue to pressure the pound.  UK macroeconomic data released last Friday were below the expectations -  manufacturing production fell by 0.1% monthly basis, while industrial production fell by 0.7% in the month (expectations : 0.2% advance). The deficit on trade in goods and services widened to £3.7 billion in February from a revised deficit of £3.0 billion in January. The economy in UK grew by 0.5% in first three months, indicating that the economy lost momentum by the end of the first quarter.

US Dollar has weakened after Trump's comments. U.S. President Donald Trump said that U.S. dollar is getting "too strong". He also likes a low-interest rate policy, while adding that a strong US Dollar "will hurt ultimately the U.S". The US economy added 98,000 new jobs in March, marking the smallest gain in almost a year. According to some analysts this is a disappointing jobs report coming in well below consensus (This is not my opinion, the unemployment rate fell to 4.5% from 4.7%—the lowest level in almost 10 years). Geopolitical risks are in the center for traders (terrorist attacks in Russia and Sweden and the U.S.' airstrikes in Syria).

 

Technical analysis

When we look at the monthly chart of this pair ( 12 years period) we can see strong " bearish" correction. On this monthly chart I marked resistance levels, 1.7000, 1.4300, 1.4000 are long - term resistance levels, 1.3000 also represents strong resistance level. As long the price is below 1.4000 resistance level there is no indication of long trend reversal and this pair is in the "sell" zone ( there could be a short term jump but strong "BUY" signal would be if the price jumps above 1.4000 level).

 

On this weekly chart (1 candle is one week period) we can also see that major trend is "bearish", price has dropped from 1.7000 level to 1.1946 level ( this level represents now strong support). On this chart I marked support and resistance levels - 1.2750,1.3000 and 1.3500 represent resistance levels, 1.2000 and 1.1946 represent strong support levels. On this chart I marked trend line and as long the price is below this line there is no indication of trend reversal (The pair is trading below 1.3000 and the bearish momentum remains lively). Breaking above 1.2600 would open way to 1.2750, breaking below 1.2200 would open way to 1.2000 (breakout of 1.2300 exposes 1.2200 region)

 

A consolidation above the 1.2500 handle, would clear the way to more gains and target 1.2550 and 1.2600.

 

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